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“Costly Conflict under Complete Information

The paper subjects these findings to a number of different robustness checks. In all these exercises, the effect of Muslim expenditures remains strong and significant. By and large, the same is true of Hindu expenditures, though in some specifications significance is lost. While the reader is invited to study these robustness exercises in detail, it is worth mentioning here that we find no similar effect of religious group expenditures on social unrest more generally; see Section V.B. The effect we uncover appears to hold only for instances of Hindu-Muslim conflict. We interpret our results in light of the model in Section III. Such an interpretation suggests that Hindu groups have largely been the aggressors in Hindu-Muslim violence in India, or at least in Hindu-Muslim violence driven by instrumental, specifically economic, considerations.4 Section II provides historical context for the model, including references to case studies in which attacks on the Muslim community can be traced to various forms of Muslim economic empowerment. We emphasize that the above interpretation follows jointly from the theory and the data, and alternative interpretations are possible. Section V discusses other explanations with possibly different implications, such as the funding of violence. The literature on ethnic violence is vast, and we do not pretend to review it here: the treatise by Horowitz ð2000Þ is an excellent entry point. It is probably fair to say that the economics of violence have not been given center stage in most of these writings, the focus being more on other correlates of conflict, such as politics, historical antagonisms, or the presence of ethnic divisions