Abstract:

 We consider an alternating-offers redistributive bargaining model where an affected third
 party can protest against proposals under review. Protests are costly and only stochastically
 successful. When successful, they secure the status quo. Stationary equilibria feature either
 inefficient protests or excessive accommodation to the third party. In both cases, the bar
gainers do not extract the full surplus. Strategic delay is necessary and sufficient to curb this
 issue: By delaying a harmful agreement with positive probability only after acquiescence,
 the bargainers create an endogenous punishment device that allows them to extract more
 surplus from the third party without triggering protests. The bargainers’ misaligned inter
ests are key for this result: If they internalized each other’s payoff, strategic delay would not
 be credible.