Global Terrrorism: Deterrence versus Pre-emption

Journal article

Sandler, Todd & Kevin Sigueira (2006) Global Terrrorism: Deterrence versus Pre-emption, Canadian Journal of Economics 39 (4): 1370–1387.

This paper analyzes two anti-terrorism policies ­ deterrence and preemption ­ in an environment where a targeted nation's people and property are in jeopardy at home and abroad. A country's deterrence decision involves both external benefits and costs, while its preemption decision only gives external benefits. With damages limited to home interests, a country will overdeter, while, for globlized terror, a country will underdeter. Preemption is always undersupplied. Leader-follower behavior is apt to lessen inefficiency for deterrence, but worsens inefficiency for preemption as compared with Nash behavior. Policy conclusions are drawn.

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