Munich Personal RePEc Archive

External Sponsorship and Counter-Terrorism

Bhan, Aditya and Kabiraj, Tarun (2018): External Sponsorship and Counter-Terrorism.

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Abstract

We consider interaction of two terror outfits and study possible counter-terrorism (CT) measures, both in the absence and presence of external terror finance. In our paper, external sponsorship with proportional allocation rule, induces strategic interaction and incentivizes more attacks. We provide a theoretical foundation for the ubiquity of defensive counter-terrorism (CT) versus the limited applicability of offensive measures and confidence-building measures (CBMs). Curtailing external sponsorship is always effective in inhibiting terror activity. In fact, targeting external funding may be the most effective CT tool if terror activity is sufficiently low. While CBMs may be more effective in the absence of external sponsorship, defensive CT may be preferable in its presence. However, CBMs may not be as effective in the presence of external sponsorship, as in its absence.

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