Self-enforcing collective counterterror retaliation

Motivated by recent examples of collective effort on the war on terror, we examine the incentives that retaliation may produce for the endogenous formation of an international counterterror coalition. We show that there are quite reasonable circumstances under which any nation that is a target of a terrorist attack finds it desirable to be a member of the international counterterror coalition, holding the choices of all other nations as given. The incentives to join the coalition are the group-specific benefits from retaliation enjoyed by each coalition member, the relatively lower spillover benefit from retaliation enjoyed by each stand-alone nation, and the inability of pre-emptive measures to avert terrorist attacks. The disincentive to join is the anticipated backlash from retaliation, which targets coalition members only.