Outbidding as Deterrence: Endogenous Demands in the Shadow of Group Competition

Abstract

The theory of outbidding states that terrorist, insurgent, and rebel groups use violence to capture a greater share of their audience’s resources. I argue that opponents of these groups should endogenously anticipate this dynamic, which potentially alters their aims. Although a seemingly obvious implication of outbidding is that violence increases as the number of groups (and thus competition) increases, I show that this may or may not hold once we factor in the opponent’s decision. This is because the target states—fearing group competition—might endogenously reduce their demands. The results help explain empirical inconsistencies regarding outbidding. Using comparative statics from the model, I then discuss the challenges to making valid inferences regarding outbidding. ∗Stanton Nuclear Security Postdoctoral Fellow, Center for International Security and Cooperation, Stanford University. (williamspaniel@gmail.com, http://williamspaniel.com).