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The evolution of concentration in the arms market

Author

Listed:
  • J. Paul Dunne

    (Department of Economics, University of Cape Town, South Africa)

  • Ron P. Smith

    (Economics, Department of Economics, Mathematics, and Statistics, Birkbeck College, University of London)

Abstract

This article examines the evolution of concentration in the global arms market, or industry, over the period 1990-2013 and considers its prospects. Using data from the Stockholm International Peace Research Institute (SIPRI) list of the largest 100 arms producing firms, it finds that within the international arms industry, there has been change but also continuity, particularly in the nature of the markets and the relations between the main producers and governments. While the changes that have taken place are important, it is still political rather than economic logic that shapes the evolution of the market. Certainly the arms industry remains relatively unconcentrated compared to other industries probably because of the domestic preferences in procurement by national governments. Countries do not like monopoly arms producers, but there is no western country other than the United States that can currently support more than one competitor, although in the near future Russia could and China may provide serious international competition to the U.S. What is clear is that there are economic forces pushing for increased competition, but the final outcome will be determined by political forces, and transparency and governance will become increasingly important issues.

Suggested Citation

  • J. Paul Dunne & Ron P. Smith, 2016. "The evolution of concentration in the arms market," Economics of Peace and Security Journal, EPS Publishing, vol. 11(1), pages 12-17, April.
  • Handle: RePEc:epc:journl:v:11:y:2016:i:1:p:12-17
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    File URL: http://www.epsjournal.org.uk/index.php/EPSJ/article/view/242
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    References listed on IDEAS

    as
    1. Xavier Gabaix, 2016. "Power Laws in Economics: An Introduction," Journal of Economic Perspectives, American Economic Association, vol. 30(1), pages 185-206, Winter.
    2. Hartley, Keith, 2007. "The Arms Industry, Procurement and Industrial Policies," Handbook of Defense Economics, in: Keith Hartley & Todd Sandler (ed.), Handbook of Defense Economics, edition 1, volume 2, chapter 33, pages 1139-1176, Elsevier.
    3. Dunne, J. Paul, 1995. "The defense industrial base," Handbook of Defense Economics, in: Keith Hartley & Todd Sandler (ed.), Handbook of Defense Economics, edition 1, volume 1, chapter 14, pages 399-430, Elsevier.
    4. Sandler,Todd & Hartley,Keith, 1995. "The Economics of Defense," Cambridge Books, Cambridge University Press, number 9780521447287, January.
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    Cited by:

    1. J. Paul Dunne, 2017. "War, peace, and development," Economics of Peace and Security Journal, EPS Publishing, vol. 12(2), pages 21-31, October.
    2. Klomp, Jeroen, 2024. "Targeting profits: The economic impact of arms embargoes on defense companies," Journal of Policy Modeling, Elsevier, vol. 46(2), pages 391-416.
    3. Brauer Jurgen, 2017. "‘Of the Expence of Defence’: What Has Changed Since Adam Smith?," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 23(2), pages 1-14, April.

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    More about this item

    Keywords

    Arms market; firm concentration; defense industry;
    All these keywords.

    JEL classification:

    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War

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