Size Asymmetry, Trade, and Militarized Conflict

A measure - trade efficiency - that models the extent to which individual economic entities within two countries trade with each other is used to investigate the claim that symmetrical dependence on trade between two states is required for the trade bond to reduce the probability of interstate conflict. ... This measure is better suited to study this question than existing measures since it is by definition uncorrelated with asymmetries in country size. The relationship between the different conceptions of interdependence and militarized conflict is explored in an expected utility model of trade, distribution of resources, and conflict. For the particular pacifying mechanisms of trade studied here, the model supports the view that trade reduces the incentives for conflict but that this effect is most clearly seen in relatively symmetric dyads.