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Title: |
A Theory of Efficient Coexistence |
| Author: |
Shyh-Fang Ueng |
| Author
Affiliation: |
Institute of Economics, Academia Sinica, Taiwan |
| Source: |
International Economic Journal, September 2005, v. 19, no. 3, pp.397-416 |
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Publication Date: |
September 2005 |
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Abstract: |
Neighbors have to coexist over an infinite horizon. Neither of them can eradicate the other or extricate himself from the bondage. Their respective resources regenerate themselves periodically. Hence the capacities for production and war recuperate from exhaustion repeatedly. This paper uses a simple dynamic model to study the cooperation and conflict between two neighbors. It is shown that the way for one party to enhance its own prosperity without inducing a war with its neighbor is to collaborate on mutually beneficial projects and divide the output according to each side's contribution. Rejecting potential collaboration or dividing the joint output disproportionately risks the eruption of war. If the duration that one side is prepared to fight exceeds that of the other, the one with a shorter duration will concede defeat before the war starts. Nonetheless, when the planned durations of war of both sides are identical, the first-strike advantage induces them to wage war simultaneously. |
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