Terrorism, Trade and Public Policy

James Anderson ()

No 701, Boston College Working Papers in Economics from Boston College Department of Economics

Abstract: Are bigger markets safer? How should government policy respond to terrorist threats? Trade draws potential terrorists and economic predators into productive activity, but trade also draws terrorist attacks. Larger trade reduces the risk of terrorist attack when the wage elasticity is high, associated with low ratios of predators to prey and high wages; but it may increase the risk of terrorist attack when the wage elasticity is low, associated with high ratios of predators to prey. Anti-terrorist trade policy should always promote trade in simultaneous play. Government first mover advantage and inelastic wage may imply trade restriction. Tolerance of smuggling may improve security. Better enforcement should ordinarily be provided for bigger, inherently safer and higher wage markets.

Keywords: terrorism; trade; policy; predation; smuggling (search for similar items in EconPapers)
JEL-codes: F13 O17 K42 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-law
Date: 2008-12-01
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