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Power Politics and International Trade

Published online by Cambridge University Press:  02 September 2013

Joanne Gowa  and
Edward D. Mansfield
Joanne Gowa
Affiliation:
Princeton University
Edward D. Mansfield
Affiliation:
Columbia University
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Abstract

Recent literature attributes the relative scarcity of open international markets to the prisoner's dilemma structure of state preferences with respect to trade. We argue that the prisoner's dilemma representation does not reflect the most critical aspect of free trade agreements in an anarchic international system, namely, their security externalities. We consider these external effects explicitly. Doing so leads us to two conclusions: (1) free trade is more likely within, rather than across, political-military alliances; and (2) alliances are more likely to evolve into free-trade coalitions if they are embedded in bipolar systems than in multipolar systems. Using data drawn from an 80-year period beginning in 1905, we test these hypotheses. The results of the analysis make it clear that alliances do have a direct, statistically significant, and large impact on bilateral trade flows and that this relationship is stronger in bipolar, rather than in multipolar, systems.

Type
Articles
Information
American Political Science Review , Volume 87 , Issue 2 , June 1993 , pp. 408 - 420
Copyright
Copyright © American Political Science Association 1993

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