Trade in the Shadow of Power

Michelle R. Garfinkel, Stergios Skaperdas and Constantinos Syropoulos

in The Oxford Handbook of the Economics of Peace and Conflict

Published in print April 2012 | ISBN: 9780195392777
Published online November 2012 | | DOI:

Series: Oxford Handbooks

 Trade in the Shadow of Power

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  • Microeconomics
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This article explores settings in which international trade takes place in insecure environments or, alternatively, in the shadow of power. The first setting focuses on the case of two countries when trade between them is itself insecure. There, the country that produces the more highly valued good tends to have a comparative disadvantage in arming, less power, and thus lower income. In a setting in which there is an insecure input, countries might prefer autarky to free trade, and that comparative advantage can be distorted relative to what would prevail in the absence of insecurity.

Keywords: international trade; insecure environments; autarky; free trade; comparative advantage

Article.  10647 words. 

Subjects: Economics ; Microeconomics ; Economic Development and Growth

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