On Distinguishing Defence Inputs in an Alliance – The Case of NORAD

Our model extends the joint-products models to allow for two types of defence inputs used to produce both an alliance-wide public defence output and a country-specific private output. Distinguishing different defence inputs is particularly appropriate in the case of the North American Aerospace Defense Command (NORAD), as the alliance-wide defence output is produced with two inputs – military technology in the form of sensors and radars and land. These two inputs are complements in the production of the alliance-wide public output. At the same time, the military technology has country-specific private benefits as this can be used by the civilian economy. Our analysis shows that distinguishing between defence inputs may change the predictions of the joint-products model. We derive conditions under which an ally responds to an increase in the defence input by other allies by increasing or decreasing its own contribution of both or only one of the defence inputs.