Market Power, War, and Strategic Delay

Abstract

This chapter develops a theory to explain how market power competition can lead to violence and strategic delay in international relations. When states have opportunities to change market structures to provide their firms with price-setting abilities, a competitive environment can emerge. Given the economic rents and political leverage that can accompany the ability to set prices in hard commodity markets, states may be motivated to take aggressive action to expand their territorial reach. This market power motivation can sometimes lead to war. However, when states are economically interdependent, they may be constrained from turning to violence. This can open up an opportunity for institutional settlements. However, in some cases, institutional rules and procedures can preclude states from reaching a settlement in line with their market power goals. When this happens, states may turn to strategic delay and attempt to gradually accumulate market power over time through salami tactics.