We examine how globalization affects trade patterns and welfare when conflict prevails domestically. We do so in a simple model of trade, in which a natural resource like oil is contested by competing groups using real resources ("guns"). Thus, conflict is viewed as ultimately stemming from...

We argue that the costs of domestic and transnational insecurity are large and economically significant and that they may vary with the trade regime of a country. Then, in evaluating trade regimes, the gains from trade need to be weighed against the change in the security costs they induce....

With increasing sophistication, economists have been estimating gravity equations for five decades. Robust evidence shows that borders and distance impede trade by much more than tariffs or transport costs can explain. We therefore advocate investigation of other sources of resistance, despite...