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A formal treatment of threats: A note on the economics of deterrence

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Summary

To discuss and clarify a theory of deterrence this article focusses on military and economic inputs of the international exchange system and uses traditional microeconomic tools. It acknowledges the stochastic character of international threat situations and the influence of the attitude towards risk. The results of this approach suggest that the impact of neither economic and military deterrents nor unconditional rewards can be established apriori and, consequently, stress the importance of minimizing the potential yield of international misconduct and the use of positive sanctions (conditional rewards) as instruments to contain undesirable behaviour amongst nations.

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  1. Economic Research Department, Algemene Bank Nederland NV, Amsterdam

    Peter A. G. van Bergeijk

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  1. Peter A. G. van Bergeijk
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This article communicates the opinion of the author. The views expressed herein are not necessarily shared by my employer. Comments by Jan Veenbergen, Erick Schut, Igor Kaňa, Kees Eitjes, Marko Bos and two referees of this journal were very helpful. A.R. Hof made suggestions on improving my language. Any errors are mine.

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van Bergeijk, P.A.G. A formal treatment of threats: A note on the economics of deterrence. De Economist 135, 298–315 (1987). https://doi.org/10.1007/BF01297312

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