Equilibrium in the Jungle Edgeworth Box

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 occurs. By assuming that coercion precedes voluntary exchange, we characterize the set of equilibria 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.