The Social Benefit of War

Magnus Hoffmann

MPRA Paper from University Library of Munich, Germany

Abstract: Recent findings in economic theory show that cooperation (settlement) between two identical players with conflicting interests in a valuable and contestable resource always Pareto dominates violent dispute (war), given that cooperation is presented using a symmetric bargaining norm. Necessary conditions for settlement to arise are the destructibility of war, and the costless and exogenous enforcement of any agreement made by the two players. We show that endogenous enforcement of the agreements alters the incentives of the players to bargain. This causes a shift in the Pareto frontier so that - under certain conditions - war Pareto dominates settlement.

Keywords: contests; property rights; endogenous enforcement; bargaining (search for similar items in EconPapers)
JEL-codes: C78 D74 C72 (search for similar items in EconPapers)
Date: 2007-10
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