This paper considers an economy where groups compete in a contest for power to redistribute future income in their favor. An increased external threat of terrorism--either an increase in the likelihood of a successful terrorist attack or a greater loss of income in the event of a successful attack--would tend to reduce the expected value of the contest prize and thus lessen the severity of the conflict at home. However, unless the marginal return from guarding against terrorism is not too large or diminishes at a sufficiently fast rate, such a shock could imply, in equilibrium, both a greater sense of security among the groups against external threats and a greater conflict between them in the domestic struggle for power.
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Paper provided by EconWPA in its series Public Economics with number
0306001.
Length: 19 pages Date of creation: 05 Jun 2003 Date of revision: Handle: RePEc:wpa:wuwppe:0306001
Note: Type of Document - pdflatex; prepared on IBM PC ; to print on HP; pages: 19 ; figures: none. none Contact details of provider: Web page: http://129.3.20.41
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Find related papers by JEL classification: D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War
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