War,pillage, and markets

Neoclassical economic theory has produced an extensive body of knowledge about market exchange based on cooperative relations: private property. This leads to an artificial dichotomy between cooperation and conflict though. It is best to view market exchange as lying along a continuum of conflict and cooperation. Conflict and cooperation are intertwined. From a game theoretic model of Hobbes' world, I show that a number of property rights structures are possible. Each is characterized as possessing varying degrees of conflict and cooperation. Finally, from a repeated game, I show how conflictual relations (mutual predation) may support more cooperative relations (private property). This new equilibrium is sub-game perfect.