Third-Party Interest, Resource Value, and the Likelihood of Conflict

Giacomo Battiston (), Matteo Bizzarri and Riccardo Franceschin ()
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Giacomo Battiston: Department of Economics and Management, University of Padova
Riccardo Franceschin: Department of Economics, SabancÄ± University

No 287, "Marco Fanno" Working Papers from Dipartimento di Scienze Economiche "Marco Fanno"

Abstract: Resource wealth induces predation incentives but also conflict-deterring third-party involvement. As a result, the relation between resource value and conflict probability is a priori unclear. This paper studies such relation with a flexible theoretical framework involving a resource holder, a predator, and a powerful third party. First, we show that, if third-party incentives to intervene are sufficiently strong, conflict probability is hump-shaped in the resource value. Second, we theoretically establish that resource value increases the third partyâ€™s incentive to side with the resource-rich defendant in case of intervention, providing another mechanism for stabilization when the resource value is high. Third, exploiting widely-used measures of resource value and geologic predictors of oil presence, we provide evidence for our theoretical results. Using data on military presence and armsâ€™ trade, we show suggestive evidence that US military influence drives a non-monotonicity of conflict probability in oil value.

Keywords: conflict; resource curse; third party; oil; intervention (search for similar items in EconPapers)
JEL-codes: D74 P48 Q34 (search for similar items in EconPapers)
Pages: 89 pages
Date: 2022-09
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Working Paper: Third-Party Interest, Resource Value, and the Likelihood of Conflict (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:pad:wpaper:0287

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