Homo neanderthalensis appeared in the valleys and caves of Europe and southwest Asia around 200,000 years ago but vanished not long after modern humans -- Homo sapiens -- appeared on the scene. Little evidence exists to suggest disease or warfare played a role in Neanderthals' extinction, and recent DNA testing has disproved the idea that Neanderthals bred into human populations. Biological differences between Neanderthals and moderns are too small to adequately explain extinction; in fact, of the two, Neanderthals may have been better physically suited to their Pleistocene environment: a stocky build with shorter, stubbier extremities reduced surface area, while big, broad noses warmed and humidified cold air as they inhaled.

The paper, entitled "How Trade Saved Humanity From Biological Exclusion: An Economic Theory of Neanderthal Extinction," posits that division of labor and exchange of resource surpluses among Homo sapiens led to an increase in food consumption and hence an increase in fertility, which then led to more consumption. This snowball effect, in part, allowed humans to replace Neanderthals.

"A number of anthropologists have noted that humans probably outcompeted Neanderthals, and they believe that something about human behavior or culture must have contributed to this," said Richard Horan, associate professor of Agricultural Economics at Michigan State University, who authored the paper along with Jason Shogren of the University of Wyoming and Erwin Bulte of Tilburg University. "But the exact behavioral mechanism had not been identified. We suggest trade is that mechanism."

Shogren, a professor of Natural Resource Conservation and Management, explained that a review of archaeological literature revealed important distinctions between humans and Neanderthals: human technological innovation was very dynamic while that of the Neanderthals remained static, with evidence of long-distance exchange among humans. Also, human living spaces appear to be partitioned according to function while Neanderthal settlements are unorganized. This suggests humans had a division of labor and traded the products of their respective efforts with one another. It also suggests an absence of such behavior among Neanderthals.

To demonstrate that trade might be an innovation that gave humans a competitive advantage, the authors assumed that the primary food of both humans and Neanderthals was meat harvested by hunting. Additionally, they assumed there was a finite amount of available meat ("animal units") for which they both competed. In addition to a non-trading scenario, three trading scenarios develop among humans: one in which skilled hunters hunt and unskilled hunters both hunt and produce other goods; one in which skilled hunters hunt and unskilled hunters only produce other goods; and another in which skilled hunters hunt and produce other goods while unskilled hunters only produce other goods.

In the economists' model, "other goods" may include everything from shelter, clothing, fire, and tools to even intangible services like the spiritual advice and comfort provided by a shaman. Any surplus meat not consumed by the skilled hunters is assumed to go to the unskilled hunters in exchange for their "other goods."

In the latter two scenarios, the authors show that meat consumption rises because the specialization of unskilled hunters solely producing other goods frees the skilled hunters to hunt more. Assuming that increased meat consumption leads to increased fertility which leads to more people hunting, humans who adopted either of these two strategies could have replaced Neanderthals in just a few millennia, even if a biological bias favoring Neanderthals is calculated into the equation.

"The reason humans might replace Neanderthals is that we outcompete them for resources," said Horan in an e-mail interview. "This is consistent with the concept of biological competitive exclusion, except that the exclusion in this case is due to behavioral reasons as opposed to strictly biological reasons."

Shogren stressed that they are not arguing that Neanderthals did not trade or cooperate among themselves; a number of Neanderthal skeletons, most notably a collection from Shanidar Cave in northern Iraq, show signs of advanced age or healed injuries, demonstrating that the individuals must have been cared for by others. What the authors are suggesting is that humans traded more than Neanderthals, giving them a relative advantage.

So why the disparity? Language might be one answer. Some recent research suggests that while Neanderthals and other hominids possessed the capability for language, the high placement of the larynx in the throat would not have permitted the range of sounds that we utilize. This may have hindered the development of complex language for Neanderthals.

Shogren said language is intrinsic to trade, an idea that has repercussions in an age of globalized exchange. "The interesting twist in all this is that language facilitated trade," said Shogren. "But is trade making certain languages go extinct? What is the link between language helping trade and trade eroding some of these less-common languages?"

Horan said that trade was just one of several reasons humans elbowed out Neanderthals. "Economic systems and ecosystems are jointly determined, with each affecting and responding to the other. Society needs to better understand and appreciate this if we are to advance the status of both types of systems."

Said Shogren: "We are asking for an integration of disciplines -- a new paleoeconomics. Hopefully, the Neanderthal story will be just one of many that take economic principles further along the ancient road."