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Counterterrorism policy: Spillovers, regime solidity, and corner solutions

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  • Bandyopadhyay, Subhayu
  • Sandler, Todd

Abstract

This paper takes a unique approach to the scenario where a resident terrorist group in a (fragile) developing nation poses a terrorism threat at home and abroad. The host developing nation's proactive countermeasures against the resident terrorist group not only limits terrorism at home and abroad, but also bolsters regime solidity or stability at home. A two-stage game is presented in which the developed country takes a leadership role to institute a tax-subsidy combination to discourage (encourage) proactive measures at home (abroad) in stage 1. Stage 2 involves both nations’ counterterrorism choices under alternative stage-1 public-policy packages. Unlike the extant literature, we explore corner and interior solutions in both stages based on the terrorists’ targeting preferences and the host nation's regime-solidity preferences. Surprisingly, the developed nation may profit from policy packages that reduce global counterterrorism while raising global terrorism. That outcome and others involve engineered counterterrorism burden shifting.

Suggested Citation

  • Bandyopadhyay, Subhayu & Sandler, Todd, 2021. "Counterterrorism policy: Spillovers, regime solidity, and corner solutions," Journal of Economic Behavior & Organization, Elsevier, vol. 188(C), pages 811-827.
    • Handle: RePEc:eee:jeborg:v:188:y:2021:i:c:p:811-827
    DOI: 10.1016/j.jebo.2021.05.031
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    Cited by:

    1. Bandyopadhyay, Subhayu & Sandler, Todd, 2023. "Politically influenced counterterrorism policy and welfare efficiency," European Journal of Political Economy, Elsevier, vol. 76(C).
    2. Bandyopadhyay, Subhayu & Sandler, Todd, 2023. "Voluntary participation in a terror group and counterterrorism policy," Journal of Economic Behavior & Organization, Elsevier, vol. 215(C), pages 500-513.
    3. Subhayu Bandyopadhyay & Todd Sandler, 2023. "The Trade-Offs of Counterterrorism Policies," Review, Federal Reserve Bank of St. Louis, vol. 105(3), pages 177-197, July.

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    More about this item

    Keywords

    Counterterrorism policy; Tax-subsidy redistributive schemes; Externalities; Terrorist-targeting preferences; Publicness and corner solutions;
    All these keywords.

    JEL classification:

    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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