Abstract War is often viewed as a bargaining problem. However, prior to bargaining, countries can vie for leverage by expending effort on diplomacy. This article presents a dynamic model of conflict where agenda‐setting power is endogenous to pre‐bargaining diplomatic competition. The ability to compete for leverage generates a new channel through which the nature of potential war affects the quality of peace. First, costs of war grow the bargaining surplus, fueling the battle for leverage and reducing welfare even if war never occurs on the path of play. Second, competitive diplomacy erodes the gains from peace, making it possible that war is relatively efficient. An extension of the model finds that frictions to cooperation create a risk of costly delay but also protect against erosion of the surplus. Moreover, I find that reliable deals avert “efficient” wars but introduce a trade‐off between welfare and timely settlement.
Joseph J. Ruggiero (Tue,) studied this question.