Appeasing Nihilists? Some Economic Thoughts on Reducing Terrorist Activity

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=726807


Abstract:
Recent contributions to the economics of terrorism have given contradicting
recommendations for campaigning against terrorism, from the proposal to
deprive terrorists of their resources to the proposal of raising the
opportunity costs of terrorism by increasing the wealth of the affected
regions. Within a simple framework which differentiates between the decision
to become an active terrorist and the decision to support terrorists and
which allows for reciprocal reactions to anti-terrorism policies, it is
argued here that undifferentiated deterrence may indeed backfire, but so may
an increase of the opportunity costs of terrorism. A very targeted
anti-terrorism policy aimed only at active terrorists would then be the most
reasonable remaining approach.


Keywords: terrorism, deterrence, reciprocity, anti-terrorism policies




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