Contributing to Peace

Abstract

Contest theory analyses an anarchic economy where agents use resources for consumption or acquisitive conflict, and explores conditions under which peace or conflict prevail in equilibrium. History suggests that peacekeepers in the shape of kings, dictators or states arise endogenously in such circumstances. I analyse a model where each of the potential contestants first has the option of contributing some resources to a neutral peacekeeper, and then allocates her remaining resources between arms and consumption. If one of the contestants subsequently attacks the other, then the peacekeeper joins its resources with the agent that is attacked. I show that, for less unequal resource distributions, contribution to peacekeeping is positive and leads to peace in equilibrium. These equilibria are pareto-superior to the corresponding equilibria of the pure Tullock contest except in a narrow range. When the distribution is too unequal, no contributions are made and conflict occurs in equilibrium.