Inefficient Peace or Preventive War?

30 Nov 2021  ·  Liqun Liu, Tusi, Wen ·

We study a model of two-player bargaining game in the shadow of a preventive trade war that examines why states deliberately maintain trade barriers in the age of globalization. Globalization can induce substantial power shifts between states, which makes the threat of a preventive trade war salient. In this situation, there may exist "healthy" levels of trade barriers that dampen the war incentives by reducing states' expected payoffs from such a war. Thus, we demonstrate that trade barriers can sometimes serve as breaks and cushions necessary to sustain inefficient yet peaceful economic cooperation between states. We assess the theoretical implications by examining the US-China trade relations since 1972.

PDF Abstract
No code implementations yet. Submit your code now



  Add Datasets introduced or used in this paper

Results from the Paper

  Submit results from this paper to get state-of-the-art GitHub badges and help the community compare results to other papers.


No methods listed for this paper. Add relevant methods here