Escalation of a local conflict into a Cold War

Abstract

Abstract Since the Russia–Ukraine conflict of 2022, the world has been headed toward a dichotomized world like the Cold War. The increasing division is not necessarily predicted by “rationalist” models based upon the costs and benefits of conflicts and trade. The existing scholarship theoretically and empirically finds that increasing trade between two countries makes it more likely that the two countries will avoid conflicts. The natural question is why the world is increasingly divided after one local conflict despite the increasing costs of division. This note sheds light on the driving forces of a dichotomy and its robustness by studying a simple signed network game model. In this game, a country chooses to be an ally or enemy of every other country. I show that one local conflict together with a particular strategy by one of the countries implicated in the conflict is sufficient to lead the world to a dichotomized world. In particular, I demonstrate that if that country employs a policy that a friend of my enemy is my enemy, then the world will always be divided into two groups, within which countries are allies and across which countries are enemies.