We develop a dynamic theory of resource wars and study the conditions under which such wars can be prevented. Our focus is on the interaction between the scarcity of resources and the incentives for war in the presence of limited commitment. We show that a key parameter determining the...

We study optimal taxation in an economy where the skills of agents evolve stochastically over time and are private information and in which agents can trade unobservably in competitive markets. We show that competitive equilibria are constrained inefficient. The government can improve welfare by...