Balance of power in a conflict model

This study provides a microeconomic foundation for the bipolar stability hypothesis in international politics. It extends the well-designed conflict model of Esteban and Ray (Am Econ Rev 101(4):1345–1374, 2011) to include monetary compensation arrangements between the winning and losing groups, presenting a new conflict-related indicator called the balance of power index. The main finding of this study is that societal polarization serves to alleviate rather than exacerbate conflict intensity, which is elucidated by the balance of power index. This new characteristic of polarization is associated with the founding of the bipolar stability hypothesis by Waltz (J Int Affairs 21(2):215–231, 1967), Waltz (Theory of international politics. Addison-Wesley Publishing Company, Reading, 1979) under the economic behavioral model.