Todd Sandler

The theory of externalities, public goods, and club goods

This book presents a theoretical treatment of externalities (i.e. uncompensated interdependencies), public goods, and club goods. The new edition updates and expands the discussion of externalities and their implications, coverage of asymmetric information, underlying game-theoretic formulations, and intuitive and graphical presentations. Topics investigated include Nash equilibrium, Lindahl equilibria, club theory, preference-revelation mechanism, Pigouvian taxes, the commons, Coase Theorem, and static and repeated games. The authors use mathematical techniques only as much as necessary to pursue the economic argument. They develop key principles of public economics that are useful for subfields such as public choice, labor economics, economic growth, international economics, environmental and natural resource economics, and industrial organization.

THE EFFECTIVENESS OF ANTITERRORISM POLICIES: A VECTOR-AUTOREGRESSION-INTERVENTION ANALYSIS

Using quarterly data from 1968 to 1988, we analyze the time series properties of the various attack modes used by transnational terrorists. Combining vector autoregression and intervention analysis, we find strong evidence of both substitutes and complements among the attack modes. We also evaluate the effectiveness of six policies designed to thwart terrorism. The existence of complements and substitutes means that policies designed to reduce one type of attack may affect other attack modes. For example, the installation of metal detectors in airports reduced skyjackings and diplomatic incidents but increased other kinds of hostage attacks (barricade missions, kidnappings) and assassinations. In the long run, embassy fortification decreased barricade missions but increased assassinations. The Reagan “get tough†policy, which resulted in the enactment of two laws in 1984 and a retaliatory raid on Libya in 1986, did not have any noticeable long-term effect on curbing terrorist attacks directed against U.S. interests.

Economic Growth, Civil Wars, and Spatial Spillovers

A neoclassical growth model is used to empirically test for the influences of a civil war on steady-state income per capita both at home and in neighboring countries. This model provides the basis for measuring long-run and short-run effects of civil wars on income per capita growth in the host country and its neighbors. Evidence of significant collateral damage on economic growth in neighboring nations is uncovered. In addition, this damage is attributed to country-specific influences rather than to migration, human capital, or investment factors. As the intensity of the measure used to proxy the conflict increases, there are enhanced neighbor spillovers. Moreover, collateral damage from civil wars to growth is more pronounced in the short run.

Causality between transnational terrorism and tourism: The case of Spain

Abstract The purpose of this paper is to devise a methodology for estimating the impact of transnational terrorism on tourism. Using monthly data from 1970–1988, we estimate the relationship between terrorism and tourism for Spain. We find that terrorist events have had a significant negative impact on the number of tourists visiting Spain. A typical incident is estimated as scaring away just over 140,000 tourists when all monthly impacts are combined. Moreover, the causality is unidirectional: terrorism affects tourism, but not the reverse.

The voluntary provision of a pure public good: The case of reduced CFC emissions and the Montreal protocol

Abstract This paper applies the theory of the voluntary provision of a pure public good to the behavior of nations to curb chlorofluorocarbon (CFC) emissions during the late 1980s. By devising an empirical test, we determine that these cutbacks in emissions are consistent with Nash behavior. When taste parameters are controlled, the relationship between emission cutbacks and national income is nearly linear as implied by the theory. If the sample is purged of potential outliers, then the linear relationship results. A significant taste parameter is the extent of political and civil freedoms, while a marginally significant parameter is geophysical position in terms of latitude.

Domestic versus transnational terrorism: Data, decomposition, and dynamics

This article devises a method to separate the Global Terrorism Database (GTD) into transnational and domestic terrorist incidents. This decomposition is essential for the understanding of some terrorism phenomena when the two types of terrorism are hypothesized to have different impacts. For example, transnational terrorism may have a greater adverse effect than domestic terrorism on economic growth. Moreover, the causes of the two types of terrorism may differ. Once the data are separated, we apply a calibration method to address some issues with GTD data – namely, the missing data for 1993 and different coding procedures used before 1998. In particular, we calibrate the GTD transnational terrorist incidents to ITERATE transnational terrorist incidents to address GTD’s undercounting of incidents in much of the 1970s and its overcounting of incidents in much of the 1990s. Given our assumption that analogous errors characterize domestic terrorist events in GTD, we apply the same calibrations to adjust GTD domestic incidents. The second part of the article investigates the dynamic aspects of GTD domestic and transnational terrorist incidents, based on the calibrated data. Contemporaneous and lagged cross-correlations for the two types of terrorist incidents are computed for component time series involving casualties, deaths, assassinations, bombings, and armed attacks. We find a large cross-correlation between domestic and transnational terrorist incidents that persists over a number of periods. A key finding is that shocks to domestic terrorism result in persistent effects on transnational terrorism; however, the reverse is not true. This finding suggests that domestic terrorism can spill over to transnational terrorism, so that prime-target countries cannot ignore domestic terrorism abroad and may need to assist in curbing this homegrown terrorism.

Patterns of Transnational Terrorism, 1970–1999: Alternative Time-Series Estimates

Using alternative time-series methods, this paper investigates the patterns of transnational terrorist incidents that involve one or more deaths. Initially, an updated analysis of these fatal events for 1970–1999 is presented using a standard linear model with prespecified interventions that represent significant policy and political impacts. Next, a (regime-switching) threshold autoregressive (TAR) model is applied to this fatality time series. TAR estimates indicate that increases above the mean are not sustainable during high-activity eras, but are sustainable during low-activity eras. The TAR model provides a better fit than previously tried methods for the fatality time series. By applying a Fourier approximation to the nonlinear estimates, we get improved results. The findings in this study and those in our earlier studies are then applied to suggest some policy implications in light of the tragic attacks on the World Trade Center and the Pentagon on September 11, 2001.

The comparative static properties of the impure public good model

Abstract This paper explores the comparative static properties of the impure public good model, in which a privately acquired activity jointly produces a public and a private good. The comparative statics are expressed in terms of familiar income and Hicks-compensated price responses. Unlike the pure public good model, the impure public model can display positively sloped reaction curves even in the absence of income effects. Comparative statics involve changes in price, or income, or the contributions of others, or the proportions in which the joint products are produced. Our representation highlights the influences that make the impure public model different from the public good case.

Charity donations in the UK: New evidence based on panel data

Abstract This paper presents a set of panel data estimates for 159 of the most prominent UK charities for the period 1983–1990. In evaluating alternative specifications, we settle on a fixed-effects estimation. Social welfare charities are shown to fund raise short of the point at which net revenues are maximized, whereas health and overseas charities are found to net revenue maximize. Religious charities maximize total revenues. Estimates of price and fund-raising elasticities are presented for charities overall and for four cohorts. For alternative income sources, no evidence of crowding-out is found.

Club theory: Thirty years later

This paper presents a self-contained survey of club theory with an emphasis on the contributions of the last fifteen years. Club goods are contrasted with pure public goods, and equilibrium and optimality notions are contrasted. After presenting three basic representations of club theory, we focus on recent advances and generalizations that include heterogeneous memberships, transaction costs, uncertain utilization, asymmetric information, and noncompetitive influences. An agenda for research is indicated that includes further analysis of asymmetric information, institutional structure, and applications.