TY  - JOUR
AU  - Anderson,James E.
AU  - Marcouiller,Douglas
TI  - Trade and Security,I: Anarchy
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 6223
PY  - 1997
Y2  - October 1997
UR  - http://www.nber.org/papers/w6223
L1  - http://www.nber.org/papers/w6223.pdf
N1  - Author contact info:
James E. Anderson
Department of Economics
Boston College
Chestnut Hill, MA 02467
Tel: 617/552-3691
Fax: 617/552-2308
E-Mail: james.anderson.1@bc.edu

Douglas Marcouiller
Economics Department
Saint Louis University
3674 Lindell Boulevard
St. Louis, MO 63108
Tel: (314) 977-3614
E-Mail: marcoudw@slu.edu
AB  - Market exchange is subject to an endogenously determined level of predation which impedes specialization and gains from trade.  We construct a model in which utility-maximizing agents opt between careers in production and careers in predation. Three types of equilibria may emerge: autarky (with no predation and no defense), insecure exchange equilibria (with predation and defense), and secure exchange equilibria (in which defense completely deters predation).  Trading equilibria, two-thirds of them secure, are supported only in a narrow range of security parameter values.  Since changes in the technologies of defense and predation have terms of trade effects, some producers may be hurt by enhanced security.  We show cases of  immiserizing security' in which producers in large poor countries are harmed by increased security.
ER  -