The Path of Terror Attacks

Abstract

This paper derives a dynamic path of ongoing terror attacks as a function of terrorists’ capacity and a target government’s counterterror capacity. The analysis provides several novel insights and characterizations. First, the effect of counterterror policy is limited. Second, proactive counterterror policy affects the depreciation (fatigue) of terrorists’ capacity, and defensive counterterror policy limits the worst-case scenario. Third, fluctuations in the time path of attacks are a function of terrorists’ time preferences and adjustment costs of changing tactics, which are policy invariant. Indeed, in our model, the oscillations of terror attacks occur irrespective of the government’s counterterror stance. Fourth, collective action inefficiencies associated with the underprovision of proactive counterterror policies and overprovision of defensive ones are further exacerbated by our finding that proactive counterterror policy is the more effective of the two. Hence, the more effective policy is underprovided.

A Preface for the Special Issue “Economics of Conflict and Terrorism”

“…Last but not least, three theoretical articles exist. Faria and Arce [5] studiy a dynamic game in discrete space and find a number of new results, namely, the fact that counter-terror is limited; defensive counter-terror limits the worst-case scenario, while proactive counterterror reduces the capacity of terrorists; proactive counter-terror is the most effective of the two, however it is underprovided; and, finally, cyclical attacks are independent of counter-terror policy and depend on the terrorist's time preferences and tactic adjustment costs. Oliveira and Silva [6] study the incentives produced as a result of retaliation for the formation of an international counter-terror coalition.…”