Market Segmentation and the Endurance of Alliances

• In Event: Formal Models of Alliance and Rivalry in Conflict

Abstract

Many scholars remain puzzled about why some alliances endure well beyond their stated needs have passed. I argue that these alliances create solutions to coordination problems in the immediate short term and, which is more, that these coordinated solutions generate spillover effects into other issue areas. In particular, I argue that alliances help generate dynamic market segmentation and, what is more, that this dynamic market segmentation is enough to microfound institutional inertia. To develop the idea. I write down a model of alliance formation, trade, and conflict over time. The normative ramifications of segmented contentious marketplaces turn on whether states achieve gains from trade in their militarization---that is, whether militarization among allies in a segmented market generates strategic substitutes or complements. The model also highlights the importance of the shadow of the future in dynamic militarization decisions, which when embedded in a market model implies that commodities markets may provide a useful data point for characterizing future violence, even conditional on the alliance structure in any given moment.

Author

• Robert J. Carroll, University of Illinois at Urbana-Champaign