Why do armed groups recruit large numbers of children as fighters, often coercively? The international community has tried to curb these crimes by shaming and punishing leaders who commit them—in short, making the crimes costlier. Are these policies effective and sufficient? The answer lies in more attention to the strategic interaction between rebel leaders and recruits. We adapt theories of industrial organization to rebellious groups and show how, being less able fighters, children are attractive recruits if and only if they are easier to intimidate, indoctrinate, and misinform than adults. This ease of manipulation interacts with the costliness of war crimes to influence rebel leaders' incentives to coerce children into war. We use a case study and a novel survey of former child recruits in Uganda to illustrate this argument and provide hard evidence not only that children are more easily manipulated in war, but also how—something often asserted but never demonstrated. Our theory, as well as a new “cross-rebel” data set, also support the idea that costliness matters: foreign governments, international organizations, diasporas, and local populations can discourage child recruitment by withholding resources or punishing offenders (or, conversely, encourage these crimes by failing to act). But punishing war crimes has limitations, and can only take us so far. Children's reintegration opportunities must be at least as great as adults' (something that demobilization programs sometimes fail to do). Also, indoctrination and misinformation can be directly influenced. We observe grassroots innovations in Uganda that could be models for the prevention and curbing of child soldiering and counterinsurgency generally.