Equilibrium in the Jungle Edgeworth Box

Harold Houba and Roland Iwan Luttens
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Harold Houba: Vrije Universiteit Amsterdam
Roland Iwan Luttens: Vrije Universiteit Amsterdam

No 25-064/VII, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: We introduce the Jungle Edgeworth Box economy as an analytical framework to analyze bilateral conflict and examine the interplay between coercion and voluntary exchange. We characterize the set of equilibria in which no further coercion or voluntary exchange ccurs. By assuming that coercion precedes voluntary exchange, we characterize the set of quilibria of a Nash Negotiation Game, where coercion is interpreted as a threat from the stronger to the weaker agent. We conclude that the jungle allocation is rarely the correct snapshot of the economy after coercion is over and exchange, facilitated by effective property rights, is about to begin.

Keywords: bilateral conflict; coercion; jungle; barter; Edgeworth box (search for similar items in EconPapers)
JEL-codes: D61 K11 P48 (search for similar items in EconPapers)
Date: 2025-11-14
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