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A Handbook of Alternative Theories of Public Economics

A Handbook of Alternative Theories of Public Economics

Elgar original reference

Edited by Francesco Forte, Ram Mudambi and Pietro Maria Navarra

This comprehensive and thought-provoking Handbook reviews public sector economics from pluralist perspectives that either complement or reach beyond mainstream views. The book takes a comprehensive interdisciplinary approach, drawing on economic elements in the fields of philosophy, sociology, psychology, history and law.

Chapter 19: Bargaining in international conflicts resolution: UN involvement and conflict settlement

Dario Maimone Ansaldo Patti and Daniel Montolio

Subjects: economics and finance, austrian economics, history of economic thought, public choice theory, public finance, public sector economics, politics and public policy, public choice


During the last fifty years, the number of International Organizations (IOs, hereafter) has grown significantly. Across this period, IOs have dealt with several episodes of international politics, some of which have also been highly dramatic, such as armed conflicts involving two or more countries. In this respect, many conflicts in the world involve developing countries, which in several cases fight over the control of natural resources. In that sense, there should be a strong common interest for conflicting countries to bargain over a solution which would be acceptable for all of them. Therefore, a priori, IOs' intervention would seem justified, or even beneficial to facilitate the bargaining process. Within this framework, the Coase theorem applied to international disputes requires that parties have clear legal entitlements and liabilities, as a condition for bargaining. Nonetheless, this is not always the case. The specific features of the Coase theorem allows for the intervention of the IOs in solving international conflicts, for instance, by establishing clear legal entitlements to each conflicting party and by promoting and facilitating bargaining through the reduction of transaction costs. Hence, as a consequence, we should observe that war is an unlikely event in the presence of IOs. However, in this public choice perspective, the Coase theorem fails to hold and war is a common outcome of international disputes, even in the presence of IOs, which have several times revealed their inability to help in settling them. We may consider several reasons to explain such a failure.

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