Terrorism and Counterterrorism : History Dependence, Spillovers and Coordination Failures

This paper is the first systematic examination of (counter)terrorism dynamic games with two types of externalities: temporal and spatial. We consider two types of non-cooperative behavior; one in which national authorities are sensitive with respect to the spatial spillovers of counterterror policy and another in which they are insensitive. We show that in the steady state intertemporal policy considerations outweigh considerations typically associated with transnational counterterror policy. That is, temporal externalities tend to outweigh spatial externalities. This then feeds into policy recommendations as to when nations should coordinate transnational counterterror policy and when policy should be spatially (in)sensitive