We draw on an ecological metaphor to analyze terror defense by governments and individuals. Governments can combat terror in part by targeting what we call the "stock of terror capacity" accumulated by a terrorist organization. The optimal control of terror stocks will rely on both periodic cleanup and ongoing abatement, a lesson derived from the optimal control of other stocks of public bads, such as pollution. The government's optimal policy portfolio also includes averting actions (reducing

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... he probability of successful attacks) and amelioration (reducing the harm from an attack). We also consider individual responses to terror threats. Citizens can protect themselves from terror by avoiding exposure to threats and by reducing the harm they suffer -actions we call "avoidance" and "amelioration," respectively. Such individual responses may exert a positive or negative externality on nearby individuals, depending on how the likelihood of harm to one person varies with the number of people similarly exposed. A simple model shows how individual responses to collective threats may undermine the effectiveness of government policies to address such threats. Indeed, in the simplest case where individuals are identical, government policies that fall short of complete protection will improve welfare not at all. Our model uncovers a strong analogy between the problem of individual responses to terror and the familiar congestion externality. JEL codes: D62, H41, H56. * Yale School of Management and Kennedy School of Government, respectively. We thank Miriam Avins and participants at the faculty seminar at the Kennedy School of Government for helpful comments. Some portions of our analysis, as noted below, draw heavily on models developed in conjunction with Benjamin Van Roy (environmental quality) and Luke Stein (terror avoidance). 1 The most lasting work on this subject is Thomas Schelling's Strategy and Conflict (1963) in part because of the breadth of its vision.