An Insecure Economy under Ratio and Logistic Conflict Technologies

A model that integrates production, exchange, and conflict is used to theoretically investigate the economic behavior of groups that experience an erosion of security within a state. The focus of our investigation is the comparative effects of different conflict production functions (i.e., ratio and logistic) and parameters (i.e., weapons productivity, conflict decisiveness) on the predictions of the integrated economy model. The model shows how two major analytical categories of mainstream economics--production and exchange--can be a source of demand for arms as groups attempt to protect their economic opportunities in the face of intrastate insecurity. Conditions are also identified under which the gains from specialized production and exchange dampen the potential for conflict and hence serve as a form of conflict mitigation. Many of the results of the integrated model are shown to be quite sensitive to the technology of conflict.