TY  - JOUR
AU  - Lakdawalla,Darius
AU  - Zanjani,George
TI  - Insurance, Self-Protection, and the Economics of Terrorism
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 9215
PY  - 2002
Y2  - September 2002
UR  - http://www.nber.org/papers/w9215
L1  - http://www.nber.org/papers/w9215.pdf
N1  - Author contact info:
Darius N. Lakdawalla
Schaeffer Center for Health Policy and Economics
University of Southern California
3335 S. Figueroa St, Unit A
Los Angeles, CA 90089-7273


Los Angeles, CA 90
Tel: 213/740-6012
E-Mail: dlakdawa@healthpolicy.usc.edu

George Zanjani
Georgia State University
E-Mail: gzanjani@gsu.edu
AB  - This paper investigates the rationale for government intervention in the market for terrorism insurance, focusing on the externalities associated with self-protection. Self-protection by one target encourages terrorists to substitute towards less fortified targets.  Investments in self- protection thus have negative external effects in the presence of rational terrorists. Government subsidies for terror insurance can discourage self-protection and limit the inefficiencies associated with these and other types of negative externalities. They may also serve as a complement to a policy of publicly provided protection.
ER  -