Bribes vs. bombs: A study in Coasean warfare

Abstract

Warfare is often thought of as the antithesis of Coasean bargaining over entitlements because armed conflicts consume real resources whose destruction could be avoided by negotiated solutions. We argue that fighting and negotiating are not mutually exclusive methods of resolving disputes between nations—there can often be a useful role for bargaining between a state and agents of its enemy, even when armed conflict has broken out between opposing states. We evaluate the efficacy and normative desirability of selectively substituting “bribes” for “bombs” as a means of warfare. We show how inter-country disparities in wealth, differences in military strength, the organization of the bribing and recipient forces, uncertainty about the outcome of the conflict, and communications technology can contribute to the efficacy of bribes. We discuss methods for enforcing bargains struck between opposing forces, a key problem in structuring bribes. We also examine the legal status of bribe agreements, under both international and US law. While the former apparently views bribery as legitimate means of warfare, the latter poses a potentially significant obstacle by refusing on public policy grounds to enforce secret contracts made with foreign agents.