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Equilibrium in the Jungle Edgeworth Box

Author

Listed:
  • Harold Houba

    (Vrije Universiteit Amsterdam)

  • Roland Iwan Luttens

    (Vrije Universiteit Amsterdam)

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.

Suggested Citation

  • Harold Houba & Roland Iwan Luttens, 2025. "Equilibrium in the Jungle Edgeworth Box," Tinbergen Institute Discussion Papers 25-064/VII, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20250064
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    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • K11 - Law and Economics - - Basic Areas of Law - - - Property Law
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies

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