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Terrorism: Deterrence May Backfire

  • Bruno S. Frey
  • Simon Luechinger

Present anti-terrorist policy concentrates almost exclusively on deterrence. It seeks to fend off terrorism by raising the cost of undertaking terrorist acts. This paper argues that deterrence policy is less effective than generally thought and induces in some cases even more terrorism. This is, in particular, the case if deterrence policy induces a centralisation of decision-making in the polity and economy. Therefore, an effective anti-terrorist policy should focus more on reducing the expected benefits of terrorist acts to prospective terrorists. Such a policy is based on strengthening rather than weakening decentralised decision-making.

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Paper provided by Institute for Empirical Research in Economics - University of Zurich in its series IEW - Working Papers with number 136.

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Handle: RePEc:zur:iewwpx:136
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  1. Drakos, Konstantinos & Kutan, Ali M., 2001. "Regional effects of terrorism on tourism: Evidence from three Mediterranean countries," ZEI Working Papers B 26-2001, ZEI - Center for European Integration Studies, University of Bonn.
  2. Lapan, Harvey E & Sandler, Todd, 1988. "To Bargain or Not to Bargain: That Is the Question," American Economic Review, American Economic Association, vol. 78(2), pages 16-21, May.
  3. Sandler, Todd & Enders, Walter, 2004. "An economic perspective on transnational terrorism," European Journal of Political Economy, Elsevier, vol. 20(2), pages 301-316, June.
  4. Im, Eric Iksoon & Cauley, Jon & Sandler, Todd, 1987. "Cycles and Substitutions in Terrorist Activities: A Spectral Approach," Kyklos, Wiley Blackwell, vol. 40(2), pages 238-55.
  5. Enders, Walter & Sandler, Todd, 1996. "Terrorism and Foreign Direct Investment in Spain and Greece," Kyklos, Wiley Blackwell, vol. 49(3), pages 331-52.
  6. Lapan, Harvey E. & Sandler, Todd, 1993. "Terrorism and Signalling," Staff General Research Papers 10808, Iowa State University, Department of Economics.
  7. Richard Kirk, 1983. "Political terrorism and the size of government: A positive institutional analysis of violent political activity," Public Choice, Springer, vol. 40(1), pages 41-52, January.
  8. Enders, Walter & Sandler, Todd, 1999. "Transnational Terrorism in the Post-Cold War Era," Staff General Research Papers 1532, Iowa State University, Department of Economics.
  9. Alberto Abadie & Javier Gardeazabal, 2001. "The Economic Costs of Conflict: A Case-Control Study for the Basque Country," NBER Working Papers 8478, National Bureau of Economic Research, Inc.
  10. Cauley, Jon & Im, Eric Iksoon, 1988. "Intervention Policy Analysis of Skyjackings and Other Terrorist Incidents," American Economic Review, American Economic Association, vol. 78(2), pages 27-31, May.
  11. Enders, Walter & Sandler, Todd, 1995. "Terrorism: Theory and applications," Handbook of Defense Economics, in: Keith Hartley & Todd Sandler (ed.), Handbook of Defense Economics, edition 1, volume 1, chapter 9, pages 213-249 Elsevier.
  12. Volker Nitsch & Dieter Schumacher, 2003. "Terrorism and Trade," Discussion Papers of DIW Berlin 353, DIW Berlin, German Institute for Economic Research.
  13. 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.
  14. Per Baltzer Overgaard, 1994. "The Scale of Terrorist Attacks as a Signal of Resources," Journal of Conflict Resolution, Peace Science Society (International), vol. 38(3), pages 452-478, September.
  15. Atkinson, Scott E & Sandler, Todd & Tschirhart, John, 1987. "Terrorism in a Bargaining Framework," Journal of Law and Economics, University of Chicago Press, vol. 30(1), pages 1-21, April.
  16. Enders, Walter & Sandler, Todd & Parise, Gerald F, 1992. "An Econometric Analysis of the Impact of Terrorism on Tourism," Kyklos, Wiley Blackwell, vol. 45(4), pages 531-54.
  17. 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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