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A New Explanation of Arms Races in the Third World: A Differential Game Model

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  • Cheng-Te Lee

    (Department of International Trade, Chinese Culture University, Taiwan)

Abstract

This paper examines the stability of arms races in the Third World countries and assumes that the utility function is separable between the consumption and the weapon stocks. We find that the military expenditures and the weapon stocks will exhibit stability and overshooting takes place for the optimal control models. Moreover, we prove that the differential game model has an unstable equilibrium, a result opposite of Deger and Sen (1984).

Suggested Citation

  • Cheng-Te Lee, 2007. "A New Explanation of Arms Races in the Third World: A Differential Game Model," Journal of Economics and Management, College of Business, Feng Chia University, Taiwan, vol. 3(2), pages 161-176, July.
  • Handle: RePEc:jec:journl:v:3:y:2007:i:2:p:161-176
    as

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    References listed on IDEAS

    as
    1. van der Ploeg, F. & de Zeeuw, A.J., 1987. "Conflict over arms accumulation in market and command economies," Research Memorandum FEW 265, Tilburg University, School of Economics and Management.
    2. Deger, Saadet & Sen, Somnath, 1995. "Military expenditure and developing countries," Handbook of Defense Economics,in: Keith Hartley & Todd Sandler (ed.), Handbook of Defense Economics, edition 1, volume 1, chapter 11, pages 275-307 Elsevier.
    3. Raymond Franck & Francois Melese, 2003. "A game theory view of military conflict in the Taiwan strait," Defense & Security Analysis, Taylor & Francis Journals, vol. 19(4), pages 327-348, December.
    4. Deger, Saadet & Sen, Somnath, 1983. "Military expenditure, spin-off and economic development," Journal of Development Economics, Elsevier, vol. 13(1-2), pages 67-83.
    5. Intriligator, Michael D, 1975. "Strategic Considerations in the Richardson Model of Arms Races," Journal of Political Economy, University of Chicago Press, vol. 83(2), pages 339-353, April.
    6. Deger, Saadet & Sen, Somnath, 1984. "Optimal control and differential game models of military expenditure in less developed countries," Journal of Economic Dynamics and Control, Elsevier, vol. 7(2), pages 153-169, May.
    7. van der Ploeg, F & de Zeeuw, A J, 1990. "Perfect Equilibrium in a Model of Competitive Arms Accumulation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 31(1), pages 131-146, February.
    8. Shieh, Jhy-yuan & Lai, Ching-chong & Chang, Wen-ya, 2002. "The impact of military burden on long-run growth and welfare," Journal of Development Economics, Elsevier, vol. 68(2), pages 443-454, August.
    9. Zou, Heng-fu, 1995. "A dynamic model of capital and arms accumulation," Journal of Economic Dynamics and Control, Elsevier, vol. 19(1-2), pages 371-393.
    10. Chang, Wen-ya & Tsai, Hsueh-fang & Lai, Ching-chong, 2002. "Anticipated foreign military threat, arms accumulation, and the current account in a small open economy," Journal of International Money and Finance, Elsevier, vol. 21(7), pages 1035-1052, December.
    11. Michael D. Intriligator & D. L. Brito, 1976. "Formal Models of Arms Races," Conflict Management and Peace Science, Peace Science Society (International), vol. 2(1), pages 77-88, February.
    12. Brito, D L, 1972. "A Dynamic Model of an Armaments Race," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 13(2), pages 359-375, June.
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    More about this item

    Keywords

    arms race; differential game model;

    JEL classification:

    • H5 - Public Economics - - National Government Expenditures and Related Policies

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