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1、JournalofInternationalEconomics95(2015)305–318ContentslistsavailableatScienceDirectJournalofInternationalEconomicsjournalhomepage:www.elsevier.com/locate/jieTradecosts,conflicts,anddefensespending☆abc,⁎MichaelSeitz,AlexanderTarasov,RomanZakharenkoaBostonConsultingGroup,GermanybUniversityofM
2、unich,GermanycHigherSchoolofEconomics,RussiaarticleinfoabstractArticlehistory:Thispaperdevelopsaquantitativemodeloftrade,militaryconflicts,anddefensespending.LoweringtradecostsReceived1July2013betweentwocountriesreducesprobabilityofanarmedconflictbetweenthem,causingbothtocutdefenseReceivedin
3、revisedform18November2014spending.Thisinturncausesadominoeffectondefensespendingbyothercountries.Asaresult,bothcountriesAccepted26November2014andtherestoftheworldarebetteroff.Weestimatethemodelusingdataontrade,conflicts,andmilitaryAvailableonline6December2014spending.Wefindthat,afterreductio
4、nofcostsoftradebetweenapairofhostilecountries,thewelfareeffectofworldwidedefensespendingcutsiscomparableinmagnitudetothedirectwelfaregainsfromtrade.JELclassification:C5©2014ElsevierB.V.Allrightsreserved.C6F13F51H56Keywords:GeneralequilibriumGainsfromtradeDefensespending1.Introductionpersonn
5、elinthepopulation)hasbeendecreasingduringthesameperi-od.Whileinthemodernworldmilitaryconflictsarequiterare,Thetraditionaltradeliteratureformulatesanumberofchannelscountries'defensespendingisstillsubstantialand,therefore,thisaddi-throughwhichacountrycangainfromtrade:thecomparativeadvan-tiona
6、leffectoftradeopennessmayhaveconsiderablewelfareimplica-tageandloveforvarietyeffects,theredistributionofproductionfactorstions.Inparticular,weaddressthefollowingquestionsinthepaper.towardsmoreproductivefirms,thelowermarkupssetbyfirmsareWhatisthemagnitudeofwelfaregainsduetoreducedconflictproba
7、-1someofthem.Inthispaper,wequantitativelyexploreanewpotentialbilityanddefensespendingcuts?Aretheycomparabletothe“tradition-sourceofgainsfromtrade.Recentempiricalstudiesshowedthatariseal”gainsfromtrade?intradebetweentwocountriesreducestheprobabilityofanarmedThe
