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Economic Theory

, Volume 50, Issue 1, pp 169–191 | Cite as

Trade and expropriation

  • Arghya Ghosh
  • Peter E. Robertson
Research Article

Abstract

We examine the effect of international trade on expropriation in a setting where law enforcement is costly. We show that, in general equilibrium, trade liberalization can reduce expropriation activities and have a first-order effect on the gains from trade. One interpretation of our results is that unskilled-labor abundant countries facing popular militia or rebel groups will experience amplified gains from trade, as expropriation levels and cost of enforcement decline with trade liberalization. However, the model also admits the possibility that globalization causes an increase in crime, particularly for skilled-labor abundant countries.

Keywords

Expropriation Factor proportions Gains from trade Legal services 

JEL Classification

F1 K42 

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Copyright information

© Springer-Verlag 2010

Authors and Affiliations

  1. 1.School of Economics, Australian School of BusinessUniversity of New South WalesSydneyAustralia
  2. 2.EconomicsUniversity of Western Australia (M251)CrawleyAustralia

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