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Foreign Aid Designed to Diminish Terrorist Atrocities can Increase Them

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Author Info
Michael Mandler and Michael Spagat () (Department of Economics, Royal Holloway, University of London)

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Abstract

A domestic power faces an enemy and commits terrorist atrocities to increase the likelihood of victory. A foreign patron can grant aid to the power but prefers fewer or no atrocities. The domestic power responds by acquiescing in the creation of uncontrollable paramilitaries that commit even more atrocities. Once the paramilitaries are set up, aid flows and the atrocity level is high. Now suppose the foreign patron is uncertain whether the domestic power can control the paramilitaries. At a pooling equilibrium the domestic power will commit more atrocities than it would commit in isolation to demonstrate to the foreign patron that the paramilitaries are beyond the domestic power’s control. Case studies of Colombia, Northern Ireland, and Middle East illustrate the models.

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Paper provided by Department of Economics, Royal Holloway University of London in its series Royal Holloway, University of London: Discussion Papers in Economics with number 03/10.

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Length: 47 pages
Date of creation: Dec 2003
Date of revision: Dec 2003
Handle: RePEc:hol:holodi:0310

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Find related papers by JEL classification:
D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances
D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information
N4 - Economic History - - Government, War, Law, and Regulation

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  1. Grossman, Herschel I, 1999. "Kleptocracy and Revolutions," Oxford Economic Papers, Oxford University Press, vol. 51(2), pages 267-83, April.
  2. Gregory D. Hess & Athanasios Orphanides, 2001. "War and Democracy," Journal of Political Economy, University of Chicago Press, vol. 109(4), pages 776-810, August. [Downloadable!] (restricted)
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  3. Overgaard, P.B., 1993. "The Scale of Terrorist Attacks as a Signal of Ressources," Economics Working Papers 1993-20, School of Economics and Management, University of Aarhus.
  4. Roemer, John E, 1985. "Rationalizing Revolutionary Ideology," Econometrica, Econometric Society, vol. 53(1), pages 85-108, January. [Downloadable!] (restricted)
  5. Jorge Restrepo, Michael Spagat and Juan Vargas, 2003. "The Dynamics of the Colombian Civil Conflict: A New Data Set," Royal Holloway, University of London: Discussion Papers in Economics 03/12, Department of Economics, Royal Holloway University of London, revised Dec 2003. [Downloadable!]
    Other versions:
  6. Edward L. Glaeser, 2002. "The Political Economy of Hatred," NBER Working Papers 9171, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  7. Lapan, Harvey E. & Sandler, Todd, 2003. "Terrorism and Signalling," Staff General Research Papers 10808, Iowa State University, Department of Economics.
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  8. Hess, Gregory D & Orphanides, Athanasios, 1995. "War Politics: An Economic, Rational-Voter Framework," American Economic Review, American Economic Association, vol. 85(4), pages 828-46, September. [Downloadable!] (restricted)
  9. Grossman, Herschel I, 1994. "Production, Appropriation, and Land Reform," American Economic Review, American Economic Association, vol. 84(3), pages 705-12, June. [Downloadable!] (restricted)
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  12. Hirshleifer, Jack, 1991. "The Technology of Conflict as an Economic Activity," American Economic Review, American Economic Association, vol. 81(2), pages 130-34, May. [Downloadable!] (restricted)
  13. Grossman, Herschel I, 1991. "A General Equilibrium Model of Insurrections," American Economic Review, American Economic Association, vol. 81(4), pages 912-21, September. [Downloadable!] (restricted)
  14. Garfinkel, Michelle R, 1994. "Domestic Politics and International Conflict," American Economic Review, American Economic Association, vol. 84(5), pages 1294-1309, December. [Downloadable!] (restricted)
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  15. Edward L. Glaeser, 2002. "The Political Economy of Hatred," Harvard Institute of Economic Research Working Papers 1970, Harvard - Institute of Economic Research. [Downloadable!]
  16. Horowitz, Andrew W, 1993. "Time Paths of Land Reform: A Theoretical Model of Reform Dynamics," American Economic Review, American Economic Association, vol. 83(4), pages 1003-10, September. [Downloadable!] (restricted)
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  1. Jorge Restrepo, Michael Spagat and Juan Vargas, 2003. "The Dynamics of the Colombian Civil Conflict: A New Data Set," Royal Holloway, University of London: Discussion Papers in Economics 03/12, Department of Economics, Royal Holloway University of London, revised Dec 2003. [Downloadable!]
    Other versions:
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