The Supply Side Determinants of Territory

Abstract

This paper introduces a simple application of contest theory that neatly captures how Boulding’s “Loss of Strength Gradient” determines the geographic extent of territory. We focus on the “supply side” of territorial conflict, showing how the costs of initiating and escalating conflict over spatially dispersed resources shape the nature and scope of territory. We show that economies of scale in the production of violence and varying costs of projecting power at a distance combine to affect the intensive and extensive margins of conflict, and ultimately the geographic distribution of territory. Comparative statics analysis shows how the distribution of conflict and territory change as costs change, helping shed light on, e.g., why new transportation technologies have historically led to a redrawing of territorial boundaries. We test and probe the boundaries of this model in two experiments varying the marginal costs of conflict over space and the fixed costs of entry. Increases in both costs interact to increase the probability of exclusive territories. The first experiment directly tests the theory in a static, one-shot setting that strictly matches the information conditions studied in the theory. The second experiment examines conflict behavior under conditions analogous to those in conflicts outside the lab: where no contestant knows the probability of winning, let alone the function determining that probability, and parties interact repeatedly. Median behavior closely tracks equilibrium predictions in all treatments.

Keywords: conflict, territory, experiments

JEL Classification: D74, C9, P48