Searcharxiv⌕ Search
Home/Archive/arXiv

arXiv · 2607.09990

Economic Power in International Trade

Ashwin Bhattathiripad·Vipin P Veetil
View original source ↗Read source document ↗Export metadata ↓

Abstract

Economic power is a country's capacity to harm another more than itself by withdrawing from a trading relationship. This paper develops a short-run model of trade disruptions to measure that power through counterfactual experiments. Sanctioned buyers and sellers relocate some of the barred flows onto alternate trade partners. Every producer, including those the sanction never touched, loses efficiency as inputs cease to arrive in their original proportions. The post-sanction equilibrium is the fixed point at which the reallocation of trade and the loss of efficiency generate self consistent production levels across all sectors of all countries in the world. Using a world input--output table of eighty economies and fifty industries, we solve for 9,480 such sanction equilibria, one for each unilateral and bilateral severance of a trading relationship. We compare the original equilibria with the sanction equilibria to compute the asymmetry in losses across bilateral country pairs due to the severance of trade between them. Our results show that mutual trade dependence is anything but mutual. The distribution of power in world trade is heavy-tailed. In the median trade relationship, one country inflicts on its trading partner four and a half times the loss it bears. Only 1 in 7 bilateral pairs has a semblance of having near equal power. The United States holds the favorable side against all seventy-nine of its partners and China against all but one. It is worth noting that power bears nearly no relation to the trade balance. Our measure of power among nation states also matches the historical record of economic coercion. The state that imposed the sanction holds the more powerful position in 170 of 185 episodes of the Global Sanctions Data Base.

Explore related subjects

econ.GNcs.SIq-fin.EC

Keep this discovery

BibTeXRIS

Ashwin Bhattathiripad, Vipin P Veetil. 2026-07-10. Economic Power in International Trade. https://arxiv.org/abs/2607.09990

Cite the original work for its findings. Save a collection to share your selection of sources.

KEEP EXPLORING

Related papers

arXiv2026

Reducing Prescription Errors Through Information Intervention: A Field Experiment in Healthcare Operations

Drug-drug interaction (DDI) errors pose serious risks to patient safety. Existing decision-support systems often require physicians to respond to alerts, disrupting workflows and contributing to high override rates. We examine whether a non-mandatory information intervention can reduce DDI errors and foster learning. Using a randomized field experiment with India's largest electronic medical record platform, we analyze 2.81 million prescriptions from 1,700 physicians using a difference-in-differences design. Treatment physicians received real-time information highlighting DDI errors without being required to respond, while control physicians received no such information. The intervention reduced DDI errors by 8.6%, corresponding to an estimated US$4.8 million in annual hospitalization cost savings and approximately 134 lives potentially saved. We identify two mechanisms: reactive correction, whereby physicians remove errors after they are flagged, and proactive learning, whereby they avoid errors before alerts occur. While early reductions are driven primarily by correction, physicians increasingly avoid errors over time. They also become less likely to repeat previously flagged errors and reduce new errors, suggesting that learning generalizes beyond specific drug pairs. The effects are consistent across physician types and do not compromise productivity or care quality. Our findings show that non-mandatory information interventions can improve patient safety through both immediate error correction and persistent, generalizable learning.

econ.GN↗
arXiv2026

How an Economy Shrinks in Space: Concavity-on-Jobs and Upward Consolidation under Demographic Decline

When a country's population declines, the aggregate economy appears to contract on the intensive margin: industrial diversity intact, every industry a little smaller. At the regional level, contraction is uneven and takes the extensive form: entire industries disappear, one after another. The relevant unit is the city: industries are nested by size - the hierarchy property of industrial location - each viable only above a minimum population. Necessity industries' thresholds bunch at the low end, so a city's industry count - and its jobs - is sharply concave in size (concavity on jobs). A modest loss pushes a small city below many thresholds at once; a large core sheds a few specialized industries, one at a time. Lost industries consolidate upward to the next city large enough to host them; for the worker it means a step down to a lower-paid local job. To recover that income, workers move up to the apex - the only city hosting the full industry range. Studying Japan - two decades ahead of the OECD, Tokyo at its apex - with worker-level panel data on the young workers who carry the migration, a wage regression in real, housing-inclusive wages identifies a Tokyo-bound migration incentive that varies by origin, following concavity on jobs.

econ.GN↗
arXiv2026

Do wind and solar curtail at negative electricity prices? Incentives and evidence across two decades of German renewable support schemes

In many power systems, wind and solar generation increasingly often exceeds electricity demand. Curtailing renewable generation in those hours matters both for prices and for the physical stability of the grid. Turning off wind turbines and solar panels is technically easier than ramping down a large power station, yet support schemes often give renewables an economic incentive to keep producing at negative prices. This paper studies wind and solar energy in Germany. For each cohort of generators it estimates, hour by hour, the incentive implied by two decades of support policy. It then sets those incentives against observed behavior, using a new estimate of market-based curtailment built from reanalysis weather data. I find that in 2025, at prices below -50 EUR/MWh, almost all wind generators had an incentive to stop producing, but only half of them did. Solar is the opposite case: nearly two thirds of the potential had no incentive to curtail at all, mostly because it receives a feed-in tariff that shields it from wholesale prices. Of the exposed remainder, just over a fifth cut production. Low exposure and response rates inflate subsidy payments and make the power system harder to operate safely. I conclude that a further expansion of wind and solar requires them to respond to price signals.

econ.GN↗