Collective Action and Transnational Terrorism

This paper applies modern tools of economic analysis to examine the nature of transnational terrorism and associated collective action concerns that arise in the aftermath of September 11. Throughout the paper, the strategic interaction between rational terrorists and targeted governments are underscored. Networked terrorists draw on their collective strengths to exploit a maximum advantage over targeted governments' inadequate and uncoordinated responses. A wide range of issues are explored including governments' deterrence races, undersupplied pre-emption, and suicidal attacks. Myriad substitutions by terrorists limit government anti-terrorism policy effectiveness. A host of policy responses are evaluated in light of economic analysis and past econometric evidence