Long Wars

Sandeep Baliga and Tomas Sjostrom

American Economic Review: Insights, 2026, vol. 8, issue 2, 145-59

Abstract: We study whether the Coase conjecture holds for bargaining during war. Two players, A and B, contest a divisible resource until one side collapses or agreement is reached. If player B is militarily strong, then he insists on getting a large share. However, player A only concedes this large share if player B credibly signals his strength by fighting a sufficiently long war. Thus, the Coase conjecture fails, and asymmetric information about military strength explains why long wars may be inevitable. Using a mechanism design approach, we derive a lower bound on the expected duration of war.

JEL-codes: C78 D74 D82 F51 (search for similar items in EconPapers)
Date: 2026
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DOI: 10.1257/aeri.20240624

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