Exit Costs and Conflict Dynamics: Lessons from the Third Cod War

Abstract

This thesis examines how exit costs influence a target state's decision to comply with a challenger state's demands, focusing on the Third Cod War between the United Kingdom and Iceland. Testing Mark J. C. Crescenzi's exit model, the study aims to delve into the details of the causal mechanism leading to the UK's decision-making process. The central question driving this study is: How do exit costs influence a target state’s decision to comply with a challenger state’s demands? The research employs a qualitative causal process-tracing method with the selection of a least-likely case. The analysis is based on primary sources such as policy discussions and official government documents from the British Houses of Parliament, alongside secondary sources including academic articles and historical reviews. Triangulation of these data sources is utilized to enhance the reliability and validity of the findings. The analysis reveals that while economic exit costs were considered by the UK, they were not the primary factor driving compliance. Instead, the reassessment of the economic value of the issue at stake, which diminished over time, significantly lowered the exit cost threshold. Additionally, broader geopolitical and strategic concerns, such as the potential for diplomatic fallout and risks to NATO cohesion, emerged as crucial factors in the UK's decision-making process. The findings support Crescenzi’s exit model, demonstrating that compliance is influenced by the relative comparison between exit costs and the exit cost threshold. However, the study also identifies significant non-economic factors that were not fully accounted for in the original model, suggesting that a more comprehensive framework is needed to understand state compliance in low-level conflicts. This research contributes to a deeper understanding of state-behavor in low-level interstate conflicts and offers insights for refining the exit model by considering stronger and diverse interdependence the world knows today.

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A master thesis from Aalborg University

Exit Costs and Conflict Dynamics: Lessons from the Third Cod War