Although most disputes between groups of people are settled peacefully, sometimes disputes result in war. This lecture uses historical examples to illustrate how the ability to negotiate a credible peaceful settlement of a dispute between sovereign states, typically a dispute over the control of territory or natural resources, depends on the divisibility of the outcome of the dispute, on the effectiveness of the fortifications and counterattacks with which an attacker would expect to have to contend, and on the permanence of the outcome of a potential war. The lecture also contrasts the possibilities for avoiding wars between sovereign states with the possibilities for avoiding civil wars.

In many countries, especially poor countries, a heavy burden of taxes, bribes, and bureaucratic hassles drives many producers into the informal sector. Is this situation explicable only as a consequence of either the ignorance or the ineptitude of the state authorities? On the contrary this paper shows that we can attribute the existence of a large informal sector to the fact that, because productive endowments contain important unobservable components, the state cannot adjust the amounts that it extracts from producers in the formal sector according to each producer's endowment. Given this fact we find that, if either the distribution of endowments is sufficiently inegalitarian or the production of private substitutes for public services is sufficiently easy, then the state would extract a large enough amount from producers in the formal sector that poorly endowed producers would choose to work in the informal sector. This result obtains both for a proprietary state, which maximizes its own net revenue, and for a hypothetical benevolent state, which would maximize the total net income of producers. But, we also find that a proprietary state would create an informal sector for a larger set of combinations of parameter values than would a hypothetical benevolent state.

The dispute that resulted in the secession of eleven Southern states from the Union and the ensuing Civil War proximately concerned the geographical expansion of slavery, but ultimately bore on the existence of the institution of slavery itself. This paper asks why in 1861 after seventy years of artful compromises over slavery Northern and Southern interests were not able to avoid secession and war. The paper seeks an answer that goes beyond a description of the breakdown of compromises based on existing constitutional arrangements. Instead the paper focuses on the failure of attempts to negotiate a new compromise. Combining theoretical and historical analysis the paper suggests that the increasing importance of the dispute over slavery for both Northern and Southern interests in the years leading up to 1861 was the critical development that led to war. The analysis also formalizes the role of overoptimism about the prospects for a quick and cheap victory as a contributing cause of the war.

This paper focuses on the choices that link the security of intellectual property rights to the environment for pirating ideas, which includes the legal system, and to the interpersonal distribution of talent. These choices include the decisions made by potentially creative people either to engage in creative activity or to be pirates of the ideas created by others and the decisions made by people who are engaged in creative activity to allocate time and effort to guarding the ideas that they create from pirating. Among other results, the analysis shows that, holding fixed the average level of talent, the existence of geniuses, who are much more talented than ordinary potentially creative people, can cause a larger fraction of potentially creative people to choose to be pirates, thereby making intellectual property rights less secure, but also can result in a larger value of ideas being created. The analysis also shows that intellectual property rights probably are too secure, in that the amount of time and effort allocated to guarding ideas from pirating probably is larger than the amount that would maximize the value of ideas created.

Why do sovereign states sometimes fail to settle territorial disputes peacefully? Also, why do even peaceful settlements of territorial disputes rarely call for the resulting border to be unfortified? This paper explores a class of answers to these questions that is based on the following premise: States can settle a territorial dispute peacefully only if (1) their payoffs from a peaceful settlement are larger than their expected payoffs from a default to war, and (2) their promises not to attack are credible. This premise directs the analysis to such factors as the advantage of attacking over both defending and counterattacking, the divisibility of the contested territory, the possibility of recurring war, the depreciation or obsolescence of fortifications, and inequality in the effectiveness of mobilized resources.

This paper develops a model of a war against illegal drug producers. This war occurs on two fronts. First, to prevent the cultivation of crops the state engages the drug producers in conflict over the control of land. Second, to impede further the production and exportation of drugs the state attempts to eradicate crops and to interdict drug shipments. The model includes an interested outsider who uses both a stick and a carrot to strengthen the resolve of the state in its war against drug producers. We use numerical calibrations of the model to evaluate the effectiveness and efficiency of Plan Colombia.

This paper uses a general‐equilibrium model of production and predation to explain observed differences across countries in educational policies. This model predicts, in accord with the facts, that countries in which the government is willing and able to enforce a collective choice to allocate resources to guarding against predators choose to have egalitarian educational policies, which serve to decrease the amount of guarding required to deter predation. In contrast, countries in which individual producers, or small subsets of producers, choose the amount of resources to allocate to guarding against predators, taking the ratio of predators to producers as given, choose to have elitist educational policies, which can serve to decrease the number of potential predators.

This paper formalizes the commonsensical hypothesis that resource scarcity causes a large allocation of time and effort to appropriative competition. Our main innovation is to model explicitly the positive intertemporal effect of consumption on the probability of survival. The critical assumption is that this effect becomes stronger as resources become scarcer. We also show that anticipated future resource abundance increases the incremental value of survival and, consequently, amplifies the current allocation of time and effort to appropriative competition. Interestingly, if resources are currently scarce, then larger anticipated future abundance can cause a big enough increase in the time and effort allocated to appropriative competition to result in a decrease in the sum of current and expected future utility, a “paradox of anticipated abundance”.

Abstract. This paper develops a theoretical model of the inequality in wages and salaries associated with differences in years of schooling (educational inequality, for short). Our model assumes that in the long run individual decisions to become more educated equalize the lifetime earnings of more educated workers and comparable less educated workers. Given this assumption, our model implies that innovations that increase the relative demand for more educated labor, and which cause short‐run increases in educational inequality, in the long run induce offsetting increases in the relative supply of more educated labor. But our model also has the novel implication that innovations that increase differences between the wages and salaries received by workers with the same years of education who are more or less able (ability premiums, for short) cause a smaller fraction of workers to choose to become more educated. Consequently, innovations that increase ability premiums in the long run also cause educational inequality to be larger than otherwise. In applying our theory to recent changes in educational inequality in the USA, we suggest that, to the extent that innovations that increase ability premiums are contributing to educational inequality, the increases in educational inequality during the 1980s and 1990s are unlikely to be reversed soon.

In many countries, especially poor countries, a heavy burden of taxes, bribes, and bu- reaucratic hassles drives many producers into the informal sector. Is this situation explicable only as a consequence of either the ignorance or the ineptitude of the state authorities? On the contrary this paper shows that we can attribute the existence of a large informal sector to the fact that, because productive endowments contain important unobservable components, the state cannot adjust the amounts that it extracts from producers in the formal sector ac- cording to each producer's endowment. Given this fact we Þnd that, if either the distribution of endowments is sufficiently inegalitarian or the production of private substitutes for public services is sufficiently easy, then the state would extract a large enough amount from produc- ers in the formal sector that poorly endowed producers would choose to work in the informal sector. This result obtains both for a proprietary state, which maximizes its own net rev- enue, and for a hypothetical benevolent state, which would maximize the total net income of producers. But, we also Þnd that a proprietary state would create an informal sector for a larger set of combinations of parameter values than would a hypothetical benevolent state.

This paper develops an economic theory of empire building. This theory addresses the choice among three strategies that empire builders historically have used. We call these strategies Uncoerced Annexation, Coerced Annexation, and Attempted Conquest. The theory shows how the choice among these strategies depends on such factors as the economic gains from imperial expansion, the relative effectiveness of imperial armies, the costs of projecting imperial military power, and liquidity constraints on financing imperial armies. This theory also addresses the scope of imperial ambitions. The paper uses examples from the history of the Roman, Mongol, Ottoman, and Nazi German empires to illustrate the applicability of the theory.

Using a general equilibrium model in which people can choose to be either producers or predators, this paper shows that, if the technology of predation is sufficiently effective, then having a “king”, who can enforce a collective choice to allocate resources to secure producers' claims to their product, is better for everyone, including both producers and potential predators, than not having a king, even though the king maximizes the consumption of a ruling elite. This result obtains because a more effective technology of predation both makes the social value of deterring predation larger and constrains the proprietary state more tightly.

The Soviet ruling elite, the nomenklatura, used both cooption and political repression to encourage loyalty to the communist regime. Loyalty was critical both in defusing internal opposition to the rule of the nomenklatura and in either deterring or defeating foreign enemies of the Soviet Union. We assume that the nomenklatura determined the extent of cooption and the intensity of political repression by equating their perceived marginal benefits and marginal costs. We use this assumption to construct an account of the historical evolution of policies of cooption and political repression in the Soviet Union.

This paper argues that, given the legacy of Chinese communism and its political structure, corruption, together with the threat of punishment for corruption and the selective enforcement of this threat, serves as a method of compensation that both satisfies the political objectives of the Communist Party and provides an effective inducement to local officials to promote economic reform.

This paper analyses a general-equilibrium model of the complementarity between economic competition for the allegiance of subjects and military competition for the control of land. In our model economic competition between rival rulers for the allegiance of subjects results in their subjects, whether they are producers or soldiers, receiving incomes equal to the value of the marginal product of a producer. Furthermore, abstracting from destruction, military competition for the control of land, to the extent that it shifts some subjects from producing to soldiering, increases the value of the marginal product of a producer. Consequently, as long as military competition is not too destructive, the subjects of rival rulers have higher incomes with both military and economic competition than with economic competition alone. Economic competition for the allegiance of subjects causes rival rulers to bear all of the cost of allocating production to military competition and to bear more than the cost of the foregone production of soldiers.

This paper explores how the viability of anarchy depends on the decisiveness parameter that determines the marginal effect of allocating a resource to an appropriative competition. In a one-factor model in which agents use in the appropriative competition the same resource that they are competing to appropriate, anarchy appears to be fragile, because in this model equilibrium consumption would be adequate for the viability of anarchy only if the decisiveness parameter were small. But, we show that this analysis is not robust. SpeciÞcally, we Þnd that in a more credible model, in which the resource that agents compete to appropriate and the resource that agents use in the appropriative competition are distinct, anarchy is viable even if the decisiveness parameter is large.