Volume 12, Issue 1

This paper considers a partial equilibrium model of conflict where two asymmetric, rational and risk-neutral opponents clash in order to redistribute a divisible prize in their favour. Differently from common contest models agents have the option of choosing a second instrument to affect the outcome of the conflict. The second instrument is assumed to capture a complex bundle of Conflict Management Procedures (CMPs). Through comparative statics, different scenarios are studied. A Potential Settlement Region (PSR) is presented as the set of all possible settlement points. First, the role of asymmetry in the evaluation of the contested stake has been underlined. The agent with the lower evaluation will expend efforts in conflict management only when the asymmetry is extremely large. When agents are asymmetrical both in evaluation of the stake and in fighting abilities, there is also a smaller PSR. Once the destruction parameter is considered, agents clearly also take into account the opportunity cost of the conflict and enlarge a PSR. Finally, throughout the paper, the concept of entropy has been applied as a tentative tool for the measurement and evaluation of conflict and conflict management.

This paper focuses on the controversy that prevails concerning the extent to which an arms race is going on between Greece and Turkey. An examination of the recent contributions on this major issue beginning the year 2000 onwards suggests that the pronounced discrepancies among the conclusions drawn in these papers may be attributed to two major reasons among others: the effectiveness of the techniques employed, as well as the inadequacy of certain policy recipes to treat actual defense incidents.

We identify market failures in the development of regional cooperation projects in the Middle East. We use a database of planned projects in the last decade and evaluate their qualities from three main perspectives: micro-economic viability, feasibility and regional impacts. Market failures are evaluated as the gaps between the values of these perspectives, and are assessed for various types of regional cooperation projects. We find that projects of cooperation in infrastructure and public services, on a bilateral or multilateral basis, defined here as ``high profile", are more characterized by heavier regional impacts, and therefore by stronger macro-economic externalities and socio-political externalities. The existence of such market failures requires a policy of stronger involvement of the public sector for the support of this type of projects. Business economic cooperation projects are mostly ``low profile" (implemented separately in single countries) and tend to be based on micro-economic viability and therefore do not require a significant public intervention.

The increasing number of local and regional conflicts around the world in the past several decades has led us to investigate the causes of war and coups. We used economic, cultural and demographic differences as explanatory variables in elucidating the causes of coups and wars between countries. We found that as the culture in a country becomes more individualistic and less collectivistic, the number of coups declines. However, as the uncertainty avoidance increases, the probability of coups also increases. When the standard of living in a country high, the probability of coups is lower. In relation to wars, we found that as the cultural differences between countries are greater, the likelihood of war is higher, and that the probability of war is also higher when the size (economic and demographic) differences are greater.