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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
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    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.

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    File URL: http://www.tandfonline.com/doi/abs/10.1080/10242690500167759
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    Bibliographic Info

    Article provided by Taylor & Francis Journals in its journal Defence and Peace Economics.

    Volume (Year): 16 (2005)
    Issue (Month): 6 ()
    Pages: 427-448

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    Handle: RePEc:taf:defpea:v:16:y:2005:i:6:p:427-448

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    Web page: http://www.tandfonline.com/GDPE20

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    Related research

    Keywords: Defense industry; Security levels; US military aid; Net defense cost; Industry profits;

    References

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    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    1. Sandler,Todd & Hartley,Keith, 1995. "The Economics of Defense," Cambridge Books, Cambridge University Press, number 9780521447287, December.
    2. 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.
    3. 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, 03.
    4. Garcia-Alonso, M.C., 1998. "The role of Technology Security in a Model of Trade with Horizontal Differentiation," UFAE and IAE Working Papers 423.98, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
    5. 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.
    6. Levine, Paul L & Sen, Somnath & Smith, Ron P, 1993. "The Economics of the International Arms Trade," CEPR Discussion Papers 770, C.E.P.R. Discussion Papers.
    7. Kobi Kagan & Asher Tishler & Avi Weiss, 2005. "On The Use Of Terror Weapons Versus Modern Weapon Systems In An Arms Race Between Developed And Less Developed Countries," Defence and Peace Economics, Taylor & Francis Journals, vol. 16(5), pages 331-346.
    8. María del Carmen García-Alonso & Keith Hartley, 1999. "Export Controls, Market Structure and International Coordination," Studies in Economics 9908, Department of Economics, University of Kent.
    9. Levine, Paul & Smith, Ron, 1995. "The Arms Trade and Arms Control," Economic Journal, Royal Economic Society, vol. 105(429), pages 471-84, March.
    10. Miyagiwa, Kaz, 1991. "Oligopoly and Discriminatory Government Procurement Policy," American Economic Review, American Economic Association, vol. 81(5), pages 1320-28, December.
    11. Perry, Martin K & Porter, Robert H, 1985. "Oligopoly and the Incentive for Horizontal Merger," American Economic Review, American Economic Association, vol. 75(1), pages 219-27, March.
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    Cited by:
    1. 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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