Terms-of-Trade and Counterterrorism Externalities

By Subhayu Bandyopadhyay, Todd Sandler, Javed Younas, working paper 2017-017. This paper investigates the interplay of trade and terrorism externalities under free trade between a developed nation that exports a manufactured good to and imports a primary product from a developing nation. A terrorist organization targets both nations and reduces its attacks in response to a nation’s defensive counterterrorism efforts, while transferring some of its attacks abroad.

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