A Trade Institution as a Peaceful Institution? A Contribution to Integrative Theory

32 Pages Posted: 27 Sep 2005

See all articles by Raul Caruso

Raul Caruso

Catholic University of the Sacred Heart of Milan

Date Written: August 2005

Abstract

Recent studies emphasize the occurrence of conflict as a rational economic activity as well as production and exchange. Agents are assumed to divide their efforts into fighting and productive activities, or as commonly denoted in 'guns' and 'butter'. This paper does try to go beyond this 'manichean' idea, assuming the Boulding's concept of 'integrative system'. In particular, the paper investigates whether a trade institution committed to free and fair trade could foster 'peaceful' benefits for member countries. The analysis, produced in a very simplified world, counts as a founding pillar the Contest Success Function. The results of the model suggest that in an institutionalized scenario, agents gain more both in terms of economic utility and in terms of peace than in 'continuing conflict' and 'obstructed trade' scenarios.

Keywords: Conflict, contest success function, trade, institution, fair trade

JEL Classification: D74, C72, F10

Suggested Citation

Caruso, Raul, A Trade Institution as a Peaceful Institution? A Contribution to Integrative Theory (August 2005). Available at SSRN: https://ssrn.com/abstract=801724 or http://dx.doi.org/10.2139/ssrn.801724

Raul Caruso (Contact Author)

Catholic University of the Sacred Heart of Milan ( email )

20123 Milano
Italy

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