Working Paper: CEPR ID: DP4524
Authors: Gil S. Epstein; Ira Gang
Abstract: 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 a 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.
Keywords: All-pay auction; Lottery; Rent-seeking; Terrorism
JEL Codes: D71; D72; D74
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| presence of a strong leader (H12) | rent distribution among the groups (D33) |
| rent distribution among the groups (D33) | level of conflict (D74) |
| presence of a strong leader (H12) | level of conflict (D74) |
| absence of a leader (Y70) | competition in a lottery contest (D44) |
| competition in a lottery contest (D44) | rent distribution based on relative efforts (D33) |
| variance in potential rents (R21) | common enemy's preference for leadership structure (D70) |
| counterterrorism measures (H56) | expected rents and strategies of groups (R21) |