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The Economic Theory of Alliances

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  • Todd Sandler

    (Iowa State University)

Abstract

This article surveys the development of the economic theory of alliances over the last quarter of a century since the 1966 article by Olson and Zeckhauser. The pure public good model and the joint product model are presented and then brought up to date. Alternative demand functions for military expenditures are indicated. Issues that concern alliance size, burden sharing, and suboptimality are addressed for the alternative paradigms. Theoretical extensions are reviewed and have involved the technology of public supply, the security function, alternative cost structures, group allocation processes, and institutional arrangements. Finally, theoretical developments are briefly related to the large empirical literature.

Suggested Citation

  • Todd Sandler, 1993. "The Economic Theory of Alliances," Journal of Conflict Resolution, Peace Science Society (International), vol. 37(3), pages 446-483, September.
    • Handle: RePEc:sae:jocore:v:37:y:1993:i:3:p:446-483
    DOI: 10.1177/0022002793037003003
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    References listed on IDEAS

    as
    1. Russett, Bruce M. & Sullivan, John D., 1971. "Collective Goods and International Organization," International Organization, Cambridge University Press, vol. 25(4), pages 845-865, October.
    2. Leonard Dudley & Claude Montmarquette, 1981. "The demand for military expenditures: An international comparison," Public Choice, Springer, vol. 37(1), pages 5-31, January.
    3. Oneal, John R., 1990. "The theory of collective action and burden sharing in NATO," International Organization, Cambridge University Press, vol. 44(3), pages 379-402, July.
    4. Todd Sandler, 1993. "The Economic Theory of Alliances," Journal of Conflict Resolution, Peace Science Society (International), vol. 37(3), pages 446-483, September.
    5. Okamura, Minoru, 1991. "Estimating the Impact of the Soviet Union's Threat on the United States-Japan Alliance: A Demand System Approach," The Review of Economics and Statistics, MIT Press, vol. 73(2), pages 200-207, May.
    6. Warr, Peter G., 1983. "The private provision of a public good is independent of the distribution of income," Economics Letters, Elsevier, vol. 13(2-3), pages 207-211.
    7. Weber, Shlomo & Wiesmeth, Hans, 1991. "Economic models of NATO," Journal of Public Economics, Elsevier, vol. 46(2), pages 181-197, November.
    8. Mancur Olson, Jr., & Richard Zeckhauser, 1967. "Collective Goods, Comparative Advantage, and Alliance Efficiency," NBER Chapters, in: Issues in Defense Economics, pages 25-63, National Bureau of Economic Research, Inc.
    9. Martin C. McGuire & Carl H. Groth, 1985. "A Method for Identifying the Public Good Allocation Process Within a Group," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 100(Supplemen), pages 915-934.
    10. Murdoch, James C & Sandler, Todd & Hansen, Laurna, 1991. "An Econometric Technique for Comparing Median Voter and Oligarchy Choice Models of Collective Action: The Case of the NATO Alliance," The Review of Economics and Statistics, MIT Press, vol. 73(4), pages 624-631, November.
    11. Todd Sandler & James C. Murdoch, 1990. "Nash-Cournot or Lindahl Behavior?: An Empirical Test for the NATO Allies," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 105(4), pages 875-894.
    12. Todd Sandler, 1977. "Impurity Of Defense: An Application To The Economics Of Alliances," Kyklos, Wiley Blackwell, vol. 30(3), pages 443-460, August.
    13. Wong, K-Y., 1988. "Foreign Trade, Military Alliance, And Defence-Burden Sharing," Discussion Papers in Economics at the University of Washington 88-11, Department of Economics at the University of Washington.
    14. Olson, Mancur, 1971. "Increasing the Incentives for International Cooperation," International Organization, Cambridge University Press, vol. 25(4), pages 866-874, October.
    15. Todd Sandler & John Posnett, 1991. "The Private Provision of Public Goods: a Perspective on Neutrality," Public Finance Review, , vol. 19(1), pages 22-42, January.
    16. Oakland, William H., 1972. "Congestion, public goods and welfare," Journal of Public Economics, Elsevier, vol. 1(3-4), pages 339-357, November.
    17. Martin McGuire, 1974. "Group size, group homo-geneity, and the aggregate provision of a pure public good under cournot behavior," Public Choice, Springer, vol. 18(1), pages 107-126, June.
    18. Jack Hirshleifer, 1983. "From weakest-link to best-shot: The voluntary provision of public goods," Public Choice, Springer, vol. 41(3), pages 371-386, January.
    19. Bergstrom, Theodore & Blume, Lawrence & Varian, Hal, 1986. "On the private provision of public goods," Journal of Public Economics, Elsevier, vol. 29(1), pages 25-49, February.
    20. Andreoni, James, 1989. "Giving with Impure Altruism: Applications to Charity and Ricardian Equivalence," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1447-1458, December.
    21. Andreoni, James, 1990. "Impure Altruism and Donations to Public Goods: A Theory of Warm-Glow Giving?," Economic Journal, Royal Economic Society, vol. 100(401), pages 464-477, June.
    22. Cornes, Richard & Sandler, Todd, 1984. "Easy Riders, Joint Production, and Public Goods," Economic Journal, Royal Economic Society, vol. 94(375), pages 580-598, September.
    23. Gonzalez, Rodolfo A & Mehay, Stephen L, 1991. "Burden Sharing in the NATO Alliance: An Empirical Test of Alternative Views," Public Choice, Springer, vol. 68(1-3), pages 107-116, January.
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    29. repec:bla:scandj:v:88:y:1986:i:4:p:583-603 is not listed on IDEAS
    30. Todd Sandler, 1988. "Sharing Burdens in NATO," Challenge, Taylor & Francis Journals, vol. 31(2), pages 29-35, March.
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    Full references (including those not matched with items on IDEAS)

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