Trade–conflict studies have shown that economic dependence can promote peace by costly signaling resolve. However, with higher economic integration, targets also become more vulnerable to coercion and potential challengers are incentivized to bluff. In return, target states may resist more, raising the question of whether trade still promotes peace. I theorize that bluffing does not stoke conflict in this context because the bargaining environment allows states to inform and coerce simultaneously: the factor that renders a threat less credible also restrains states from further escalation. I test this theory’s implications with a structural estimation method and find supporting results.
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