Premium
ANARCHY AND AUTARKY: ENDOGENOUS PREDATION AS A BARRIER TO TRADE*
Author(s) -
Anderson James E.,
Marcouiller Douglas
Publication year - 2005
Publication title -
international economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.658
H-Index - 86
eISSN - 1468-2354
pISSN - 0020-6598
DOI - 10.1111/j.0020-6598.2005.00315.x
Subject(s) - autarky , economics , gains from trade , predation , general equilibrium theory , comparative advantage , microeconomics , production (economics) , endogenous growth theory , trade barrier , international economics , international trade , ecology , market economy , biology , welfare , human capital
This article presents a general equilibrium two‐country Ricardian trade model with endogenous transactions costs that arise from individual utility‐maximizing allocation of labor to production and piracy. In the absence of institutions for risk sharing and coordination of defense, autarky obtains over most of the parameter space. When both trade and predation are supported in equilibrium, terms of trade effects can make security immiserizing. In that case, paradoxically, predation creates trade.