The Interplay between Preemptive and Defensive Counterterrorism Measures: A Two-Stage Game

38 Pages Posted: 6 Oct 2008 Last revised: 28 Apr 2009

See all articles by Subhayu Bandyopadhyay

Subhayu Bandyopadhyay

Federal Reserve Bank of St. Louis - Research Division; IZA Institute of Labor Economics; West Virginia University

Todd M. Sandler

University of Texas at Dallas - School of Economic, Political and Policy Sciences, Department of Economics & Finance

Date Written: April 24, 2009

Abstract

A two-stage game depiction of counterterrorism is presented, where the emphasis is on the interaction between the preemptive and defensive measures taken by two targeted countries facing a common threat. The preemptor is likely to be the high-cost defender with the greater foreign interests. A prime-target country may also assume the preemptor role. The analysis identifies key factors – cost comparisons, foreign interests, targeting risks, and domestic terrorism losses – that determine counterterrorism allocations. The study shows that the market failures associated with preemptive and defensive countermeasures may be jointly ameliorated by a disadvantaged defender. Nevertheless, the subgame perfect equilibrium will still be suboptimal owing to a preemption choice that does not fully internalize the externalities.

Keywords: Transnational Terrorism, Counterterrorism, Preemption, Defense, Public Goods

JEL Classification: D62, H40

Suggested Citation

Bandyopadhyay, Subhayu and Sandler, Todd M., The Interplay between Preemptive and Defensive Counterterrorism Measures: A Two-Stage Game (April 24, 2009). Available at SSRN: https://ssrn.com/abstract=1279536 or http://dx.doi.org/10.2139/ssrn.1279536

Subhayu Bandyopadhyay (Contact Author)

Federal Reserve Bank of St. Louis - Research Division ( email )

411 Locust St
PO Box 442
St. Louis, MO 63011
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

West Virginia University ( email )

Morgantown, WV 26506-6025
United States
304-293-7879 (Phone)
304-293-7061 (Fax)

Todd M. Sandler

University of Texas at Dallas - School of Economic, Political and Policy Sciences, Department of Economics & Finance ( email )

Richardson, TX 75083
United States

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