published in: Defense and Peace Economics, 2007, 18 (6), 469–484
We examine who benefits when there is a strong leader in place, and those who benefit
when a situation lacks a proper leader. There are fractious terrorist groups who seek to serve
the same people in common cause against a common enemy. The groups compete for rents
obtained from the public by engaging in actions against the common enemy. We derive a
condition under which the concerned parties, the terrorist groups and the local population
upon whom the terrorist groups inflict their actions, benefit or lose in the two scenarios, and
examine the consequences of counter-terrorist policy.
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