Geopolitics and International Trade Infrastructure

44 Pages Posted: 12 Jul 2021

See all articles by Sebastian Galiani

Sebastian Galiani

University of Maryland - Department of Economics

Jose Manuel Paz y Miño

Catholic University of Uruguay

Gustavo Torrens

Indiana university

Multiple version iconThere are 2 versions of this paper

Date Written: July 8, 2021

Abstract

We develop a simple (incumbent versus entrant) strategic deterrence model to study the economic and geopolitical interactions underlying international trade-related infrastructure projects such as the Panama Canal. We study the incentives for global geopolitical players to support allied satellite countries where these projects are or could potentially be built. We show that even if no effective competitor emerges, the appearance of a geopolitical challenger capable of credibly supporting the entrant has a pro-competition economic effect which benefits consumers all over the world.

Keywords: market entry, deterrence, international trade infrastructure, geopolitics.

JEL Classification: L1, F5

Suggested Citation

Galiani, Sebastian and Paz y Miño, Jose Manuel and Torrens, Gustavo, Geopolitics and International Trade Infrastructure (July 8, 2021). Available at SSRN: https://ssrn.com/abstract=3882736 or http://dx.doi.org/10.2139/ssrn.3882736

Sebastian Galiani

University of Maryland - Department of Economics ( email )

College Park, MD 20742
United States

Jose Manuel Paz y Miño

Catholic University of Uruguay ( email )

Av. 8 de Octubre 2738
Montevideo, CP 11600
Uruguay

Gustavo Torrens (Contact Author)

Indiana university ( email )

Wylie Hall, 100 S Woodland Ave
Bloomington, IN 47405-7104
United States
8128568131 (Phone)
47405-7104 (Fax)

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