The Arctic scramble: Introducing claims in a contest model

In this paper I integrate elements from the bankruptcy literature in a resource contest model. In a contest model, agents fight over a contested resource and their investment in 'guns' determines how much of the resource is secured by each agent. In a bankruptcy problem, agents claim a share of a contested resource, and their claims determine the allocation to each agent. The integrated model of this paper allows the combination of guns and claims to jointly determine the distribution of a contested resource. The relevance of such a model is motivated using the Arctic scramble as a leading example. This contest over the Arctic's oil and gas reserves involves the five coastal Arctic countries, each with its own distinct territorial claim. I propose four contest-bankruptcy rules that integrate the most common contest success function with four classical bankruptcy rules. These four rules are assessed and effects of integrating claims and guns in one rule are analysed for a resource contest model.

► I analyse resource contests with claims using elements from the bankrupty literature. ► Inclusion of claims implies that claims and effort ('guns') act as substitutes. ► The costs of conflict are lower than in conventional contest models. ► An application to the Arctic scramble shows the relevance of claims in contests.