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The Effects Of The World Defense Industry And Us Military Aid To Israel On The Israeli Defense Industry: A Differentiated Products Model

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  • Yoad Shefi
  • Asher Tishler

Abstract

This paper models the interactions between the defense industry market structure and the defense needs of Israel, the USA and Western Europe, which produce several heterogeneous defense goods. The model specifies that the defense industries of the US and Europe are 'large' while that of Israel is 'small'. The US military aid to Israel is also an integral part of the model. The results show that net defense costs of Israel are minimal when the number of its defense firms is one. The model predicts that an increase in US military aid reduces Israel's government expenditure, its defense industry's profits and its net defense costs.

Suggested Citation

  • 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.
    • Handle: RePEc:taf:defpea:v:16:y:2005:i:6:p:427-448
    DOI: 10.1080/10242690500167759
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    References listed on IDEAS

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    Cited by:

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    2. Ronen Bar-El & Kobi Kagan & Asher Tishler, 2010. "Forward-Looking versus Shortsighted Defense Budget Allocation," Journal of Conflict Resolution, Peace Science Society (International), vol. 54(4), pages 638-662, August.
    3. Goo, Young-Wan & Lee, Seong-Hoon, 2014. "Military Alliances and Reality of Regional Integration: Japan, South Korea, the US vs. China, North Korea," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 29, pages 329-342.
    4. Abraham Carmeli & David Waldman, 2010. "Leadership, behavioral context, and the performance of work groups in a knowledge-intensive setting," The Journal of Technology Transfer, Springer, vol. 35(4), pages 384-400, August.

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