Power dynamics in trade could lead to lower welfare for some
The article explores how international trade changes when countries don't rely on outside help to enforce property rights. Without this help, countries use power to protect their resources and products. This power affects prices in markets, making them different from what traditional models predict. In some cases, countries that make valuable goods arm less, putting them at a disadvantage. This can lead to lower welfare compared to a competitive market with perfect security. In certain situations, free trade may not be better than self-sufficiency because the costs of conflict outweigh the benefits of trade. Overall, power dynamics can distort which countries have a comparative advantage in trade.