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Politically influenced counterterrorism policy and welfare efficiency

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  • Subhayu Bandyopadhyay
  • Todd Sandler

Abstract

The paper examines how two targeted countries strategically deploy their counterterror forces when lobbying defense firms influence counterterror provision. For proactive measures, lobbying activities in a single targeted country lessen underprovision, raise overall counterterrorism, and reduce terrorism. Welfare decreases in the politically influenced country but increases in the other targeted country owing to enhanced free riding. Lobbying influence on the targeted countries’ welfare is tied to terrorists’ targeting preferences and how the lobbied government weighs citizens’ welfare. For key parametric values, lobbying in both targeted countries may result in the first-best equilibrium. With two-country lobbying, international policy coordination by at-risk governments may lead, surprisingly, to less efficient outcomes than the noncooperative equilibrium. Additionally, lobby-influenced defensive countermeasures generally affect efficiency adversely.

Suggested Citation

  • Subhayu Bandyopadhyay & Todd Sandler, 2022. "Politically influenced counterterrorism policy and welfare efficiency," Working Papers 2022-007, Federal Reserve Bank of St. Louis.
  • Handle: RePEc:fip:fedlwp:93884
    DOI: 10.20955/wp.2022.007
    Note: Publisher DOI: https://doi.org/10.1016/j.ejpoleco.2022.102250
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    Cited by:

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    More about this item

    Keywords

    proactive counterterror and lobbying; drones; unilateral Nash equilibrium; politically influenced Nash equilibrium; welfare efficiency;
    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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