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The interplay between preemptive and defensive counterterrorism measures: a two-stage game

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  • Subhayu Bandyopadhyay
  • Todd Sandler

Abstract

A two-stage game depiction of counterterrorism is presented, where the emphasis is on the interaction between the preemptive and defensive measures taken by two targeted countries facing a common threat. The preemptor is likely to be the high-cost defender with the greater foreign interests. A prime-target country may also assume the preemptor role. The analysis identifies key factors - cost comparisons, foreign interests, and targeting risks - that determine counterterrorism allocations. The study shows that the market failures associated with preemptive and defensive countermeasures may be jointly ameliorated by a disadvantaged defender. Nevertheless, the subgame perfect equilibrium will still be suboptimal owing to a preemption choice that does not fully internalize the externalities.

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Bibliographic Info

Paper provided by Federal Reserve Bank of St. Louis in its series Working Papers with number 2008-034.

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Date of creation: 2009
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Handle: RePEc:fip:fedlwp:2008-034

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Keywords: Terrorism ; War - Economic aspects;

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  1. Kunreuther, Howard & Heal, Geoffrey, 2003. " Interdependent Security," Journal of Risk and Uncertainty, Springer, vol. 26(2-3), pages 231-49, March-May.
  2. Atin Basuchoudhary & Laura Razzolini, 2005. "Hiding in Plain Sight – Using Signals to Detect Terrorists," Working Papers 0502, VCU School of Business, Department of Economics.
  3. Vicki Bier & Santiago Oliveros & Larry Samuelson, 2006. "Choosing What to Protect: Strategic Defensive Allocation against an Unknown Attacker," Levine's Bibliography 321307000000000158, UCLA Department of Economics.
  4. Sandler, Todd & Lapan, Harvey E., 1988. "The Calculus of Dissent: An Analysis of Terrorists' Choice of Targets," Staff General Research Papers 10818, Iowa State University, Department of Economics.
  5. repec:cup:cbooks:9780521616508 is not listed on IDEAS
  6. Sandler, Todd & Arce, Daniel G., 2007. "Terrorism: A Game-Theoretic Approach," Handbook of Defense Economics, Elsevier.
  7. Sandler, Todd & Enders, Walter, 2004. "An economic perspective on transnational terrorism," European Journal of Political Economy, Elsevier, vol. 20(2), pages 301-316, June.
  8. Enders, Walter & Sandler, Todd, 2000. "Is Transnational Terrorism Becoming More Threatening? A Time-Series Investigation," Staff General Research Papers 1823, Iowa State University, Department of Economics.
  9. Lee, Dwight R, 1988. "Free Riding and Paid Riding in the Fight against Terrorism," American Economic Review, American Economic Association, vol. 78(2), pages 22-26, May.
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Cited by:
  1. Subhayu Bandyopadhyay & Todd Sandler & Javed Younas, 2011. "Foreign aid as counterterrorism policy," Oxford Economic Papers, Oxford University Press, vol. 63(3), pages 423-447, July.
  2. Todd Sandler, 2011. "The many faces of counterterrorism: an introduction," Public Choice, Springer, vol. 149(3), pages 225-234, December.
  3. Subhayu Bandyopadhyay & Todd Sandler, 2011. "Immigration policy and counterterrorism," Working Papers 2011-012, Federal Reserve Bank of St. Louis.
  4. Subhayu Bandyopadhyay & Christopher H. Wheeler, 2007. "Urban crime and labor mobility," Working Papers 2007-046, Federal Reserve Bank of St. Louis.

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