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Alliances among asymmetric countries

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  • Prabal Roy Chowdhury

    ()
    (Indian Statistical Institute, New Delhi)

Abstract

We examine alliances between asymmetric countries. We find that the results depend on the nature of the equilibrium. If the equilibrium is an interior one then, with an increase in asymmetry, the level of the alliance-wide defense good decreases and the divergence between the first best and the equilibrium level of the defense good increases. In case the equilibrium involves a corner solution, these results are reversed though. It may be argued, however, that the interior equilibrium case is the more relevant one.

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Bibliographic Info

Paper provided by Indian Statistical Institute, New Delhi, India in its series Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers with number 06-04.

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Length: 19 pages
Date of creation: Jun 2006
Date of revision:
Handle: RePEc:ind:isipdp:06-04

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Keywords: Alliance; Asymmetry; Public good; Defence;

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  1. Cornes, Richard & Hartley, Roger & Sandler, Todd, 1999. " Equilibrium Existence and Uniqueness in Public Good Models: An Elementary Proof via Contraction," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 1(4), pages 499-509.
  2. Sandler, Todd, 1977. "Impurity of Defense: An Application to the Economics of Alliances," Kyklos, Wiley Blackwell, vol. 30(3), pages 443-60.
  3. Keith Hartley & Todd Sandler, 2001. "Economics of Alliances: The Lessons for Collective Action," Journal of Economic Literature, American Economic Association, vol. 39(3), pages 869-896, September.
  4. Weber, S. & Wiesmeth, H., 1990. "Economic Models of NATO," Papers 90-7, York (Canada) - Department of Economics.
  5. 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.
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