IDEAS home Printed from https://ideas.repec.org/a/sae/jocore/v48y2004i5p672-698.html
   My bibliography  Save this article

Security Needs, Arms Exports, and the Structure of the Defense Industry

Author

Listed:
  • Saar Golde

    (Department of Economics, Stanford University)

  • Asher Tishler

    (Faculty of Management, Tel Aviv University)

Abstract

A two-stage game theoretic model is developed in which firms in two producer blocs (the United States and Western Europe) produce a homogeneous defense good and sell it to their own governments and to the rest of the world. The security levels of the two producer blocs depend on their purchase of the defense good relative to the amount purchased by the rest of the world. Countries choose their security levels, such that their welfare, which depends on their security level and on government expenditure on other goods and services, is maximized. Results show that net defense costs of the United States and Europe are lower when the number of defense firms is small and that a further increase in world prices will crowd out developing countries from the market for modern weapon systems and may force them to develop and use “cheap and dirty†weapons.

Suggested Citation

  • Saar Golde & Asher Tishler, 2004. "Security Needs, Arms Exports, and the Structure of the Defense Industry," Journal of Conflict Resolution, Peace Science Society (International), vol. 48(5), pages 672-698, October.
    • Handle: RePEc:sae:jocore:v:48:y:2004:i:5:p:672-698
    DOI: 10.1177/0022002704267933
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/0022002704267933
    Download Restriction: no
    File URL: https://libkey.io/10.1177/0022002704267933?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Anderton, Charles H., 1995. "Economics of arms trade," Handbook of Defense Economics, in: Keith Hartley & Todd Sandler (ed.), Handbook of Defense Economics, edition 1, volume 1, chapter 18, pages 523-561, Elsevier.
    2. Miyagiwa, Kaz, 1991. "Oligopoly and Discriminatory Government Procurement Policy," American Economic Review, American Economic Association, vol. 81(5), pages 1320-1328, December.
    3. Mary Carmen Garcia-Alonso, 1999. "Price competition in a model of arms trade," Defence and Peace Economics, Taylor & Francis Journals, vol. 10(3), pages 273-303.
    4. Rogerson, William P, 1990. "Quality vs. Quantity in Military Procurement," American Economic Review, American Economic Association, vol. 80(1), pages 83-92, March.
    5. del Carmen Garcia-Alonso, Maria, 2000. "The role of technology security in a model of trade with horizontal differentiation," International Journal of Industrial Organization, Elsevier, vol. 18(5), pages 747-772, July.
    6. Orlando I. Balboa & Andrew F. Daughety & Jennifer F. Reinganum, 2004. "Market Structure and the Demand for Free Trade," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 13(1), pages 125-150, March.
    7. Paul Levine & Ron Smith, 2000. "Arms Export Controls and Proliferation," Journal of Conflict Resolution, Peace Science Society (International), vol. 44(6), pages 885-895, December.
    8. Levine, Paul & Smith, Ron, 1997. "The arms trade and the stability of regional arms races," Journal of Economic Dynamics and Control, Elsevier, vol. 21(2-3), pages 631-654.
    9. McAfee, R. Preston & McMillan, John, 1989. "Government procurement and international trade," Journal of International Economics, Elsevier, vol. 26(3-4), pages 291-308, May.
    10. William P. Rogerson, 1994. "Economic Incentives and the Defense Procurement Process," Journal of Economic Perspectives, American Economic Association, vol. 8(4), pages 65-90, Fall.
    11. David Kirkpatrick, 2004. "Trends in the costs of weapon systems and the consequences," Defence and Peace Economics, Taylor & Francis Journals, vol. 15(3), pages 259-273.
    12. Smith, R P, 1989. "Models of Military Expenditure," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 4(4), pages 345-359, Oct.-Dec..
    13. Smith, R P, 1980. "The Demand for Military Expenditure," Economic Journal, Royal Economic Society, vol. 90(363), pages 811-820, December.
    14. William E. Kovacic & Dennis E. Smallwood, 1994. "Competition Policy, Rivalries, and Defense Industry Consolidation," Journal of Economic Perspectives, American Economic Association, vol. 8(4), pages 91-110, Fall.
    15. Sandler,Todd & Hartley,Keith, 1995. "The Economics of Defense," Cambridge Books, Cambridge University Press, number 9780521447287, October.
    16. Smith, R P, 1987. "The Demand for Military Expenditure: A Correction," Economic Journal, Royal Economic Society, vol. 97(388), pages 989-990, December.
    17. Levine, Paul & Smith, Ron, 1995. "The Arms Trade and Arms Control," Economic Journal, Royal Economic Society, vol. 105(429), pages 471-484, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Paul Dunne & Maria del Carmen Garcia-Alonso & Paul Levine & Ron Smith, 2007. "Determining The Defence Industrial Base," Defence and Peace Economics, Taylor & Francis Journals, vol. 18(3), pages 199-221.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Yoad Shefi & Asher Tishler, 2005. "The Effects Of The World Defense Industry And Us Military Aid To Israel On The Israeli Defense Industry: A Differentiated Products Model," Defence and Peace Economics, Taylor & Francis Journals, vol. 16(6), pages 427-448.
    2. Gangopadhyay Partha, 2014. "A Formal Model of Arms Market with Cash-for-Favours," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 20(3), pages 411-428, August.
    3. Benny Mantin & Asher Tishler, 2004. "The structure of the defense industry and the security needs of the country: a differentiated products model," Defence and Peace Economics, Taylor & Francis Journals, vol. 15(5), pages 397-419.
    4. Bove Vincenzo & Gleditsch Kristian Skrede, 2011. "2010 Lewis Fry Richardson Lifetime Achievement Award: Ron P. Smith and the Economics of War and Peace," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 17(1), pages 1-12, December.
    5. Itay Ringel & Asher Tishler, 2011. "The Government Budget Allocation Process and National Security: An Application to the Israeli–Syrian Arms Race," Chapters, in: Derek L. Braddon & Keith Hartley (ed.), Handbook on the Economics of Conflict, chapter 6, Edward Elgar Publishing.
    6. García-Alonso, María D.C. & Levine, Paul, 2008. "Strategic procurement, openness and market structure," International Journal of Industrial Organization, Elsevier, vol. 26(5), pages 1180-1190, September.
    7. Renaud Bellais, 2013. "Technology and the defense industry: real threats, bad habits, or new (market) opportunities?," Post-Print hal-00947395, HAL.
    8. Dunne J. Paul & Nikolaidou Eftychia & Smith Ron P., 2005. "Is there an Arms Race between Greece and Turkey?," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 11(2), pages 140-174, November.
    9. Oliver Pamp & Florian Dendorfer & Paul W. Thurner, 2018. "Arm your friends and save on defense? The impact of arms exports on military expenditures," Public Choice, Springer, vol. 177(1), pages 165-187, October.
    10. Paul Levine & Ron Smith, 2000. "Arms Export Controls and Proliferation," Journal of Conflict Resolution, Peace Science Society (International), vol. 44(6), pages 885-895, December.
    11. Yongmin Chen & Ron Smith, 2001. "Equilibrium Cost Overruns," Annals of Economics and Finance, Society for AEF, vol. 2(2), pages 401-414, November.
    12. Andreas Blume & Asher Tishler, 2000. "Security Needs and the Performance of the Defense Industry," CIG Working Papers FS IV 00-04, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
    13. Maria del Carmen Garcia-Alonso & Keith Hartley, 2000. "Export controls, market structure and international coordination," Defence and Peace Economics, Taylor & Francis Journals, vol. 11(3), pages 481-503.
    14. Young-Wan Goo & Seung-Nyeon Kim, 2009. "A study on the military alliance of South Korea–United States with the existence of threat from North Korea: a public good demand approach," Empirical Economics, Springer, vol. 36(3), pages 597-610, June.
    15. Paul Levine & Fotis Mouzakis & Ron Smith, 2000. "Arms export controls and emerging domestic producers," Defence and Peace Economics, Taylor & Francis Journals, vol. 11(3), pages 505-531.
    16. Renaud Bellais & Martial Foucault & Jean-Michel Oudot, 2014. "Économie de la défense," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-01052607, HAL.
    17. Ramazan ErdaÄŸ, 2021. "Security Environment and Military Spending of Turkey in the 2000s," Contemporary Review of the Middle East, , vol. 8(1), pages 120-139, March.
    18. Chen Bing-Fu & Zhao Liming, 2006. "The Determinants of China's Defense Expenditure Before and After Transition," Conflict Management and Peace Science, Peace Science Society (International), vol. 23(3), pages 227-244, July.
    19. J. Paul Dunne & Eftychia Nikolaidou & Nikolaos Mylonidis, 2003. "The demand for military spending in the peripheral economies of Europe," Defence and Peace Economics, Taylor & Francis Journals, vol. 14(6), pages 447-460.
    20. J Paul Dunne & Maria Garcia Alonso & Paul Levine & Ron Smith, 2003. "Concentration in the International Arms Industry¤," Working Papers 0301, Department of Accounting, Economics and Finance, Bristol Business School, University of the West of England, Bristol.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:jocore:v:48:y:2004:i:5:p:672-698. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: http://pss.la.psu.edu/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.