Can negotiations prevent fish wars? (Q1575287)

The standard alternating offer model is extended by integrating it with the Levhari and Mirman fish war model in order to investigate negotiations over fish quota. The disagreement actions are endogenous. The interior and linear Markov Perfect Equilibrium (MPE) results in immediate agreement on an efficient path of fish quota. This MPE is not analytically tractable. Numerical solutions show that patience is a disadvantage in this MPE and small differences in patience lead to large asymmetries in the bargaining outcome.