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The demand for military expenditures: An international comparison


  • Leonard Dudley
  • Claude Montmarquette


Earlier studies have explained inter-country variations in the share of GNP devoted to military expenditures by international spillovers and by differences in the threat of attack related to relative incomes. In this paper, we use the theory of public choice to explain these differences. We attempt to measure the importance of both international spillovers and relative incomes, along with two other factors: the tax-price elasticity of demand and economies of scale in the consumption of security. We find that international spillovers are significant and positive, that the income elasticity of demand is greater than unity, that the tax-price elasticity of demand explains part of observed inter-country differences, and that there are considerable economies of scale in the consumption of military spending. Finally, between 1960 and 1975, there was apparently a substantial increase in the value which each country derived from a dollar of military spending by its allies. This phenomenon, which seems related to the increased importance of deterrent weapons, has tended to induce individual alliance members to reduce the share of their national income devoted to defense. Copyright Martinus Nijhoff Publishers 1981

Suggested Citation

  • Leonard Dudley & Claude Montmarquette, 1981. "The demand for military expenditures: An international comparison," Public Choice, Springer, vol. 37(1), pages 5-31, January.
  • Handle: RePEc:kap:pubcho:v:37:y:1981:i:1:p:5-31
    DOI: 10.1007/BF00124229

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    References listed on IDEAS

    1. Bergstrom, Theodore C & Goodman, Robert P, 1973. "Private Demands for Public Goods," American Economic Review, American Economic Association, vol. 63(3), pages 280-296, June.
    2. Borcherding, Thomas E & Deacon, Robert T, 1972. "The Demand for the Services of Non-Federal Governments," American Economic Review, American Economic Association, vol. 62(5), pages 891-901, December.
    3. Thomas Romer & Howard Rosenthal, 1978. "Political resource allocation, controlled agendas, and the status quo," Public Choice, Springer, vol. 33(4), pages 27-43, December.
    4. Sandler, Todd, 1977. "Impurity of Defense: An Application to the Economics of Alliances," Kyklos, Wiley Blackwell, vol. 30(3), pages 443-460.
    5. Thompson, Earl A, 1979. "An Economic Basis for the "National Defense Argument" for Aiding Certain Industries," Journal of Political Economy, University of Chicago Press, vol. 87(1), pages 1-36, February.
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    Cited by:

    1. Hikaru Ogawa, 2007. "Strategic Taxation on Mobile Capital with Spillover Externality," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 63(1), pages 33-45, March.
    2. Hansen, Laurna Jane, 1988. "Conventional versus strategic expenditures in NATO: a public goods approach," ISU General Staff Papers 1988010108000017600, Iowa State University, Department of Economics.
    3. Töngür, Ünal & Hsu, Sara & Elveren, Adem Yavuz, 2015. "Military expenditures and political regimes: Evidence from global data, 1963–2000," Economic Modelling, Elsevier, vol. 44(C), pages 68-79.
    4. Antonio Martínez González & Nuria Rueda López, 2013. "A Productivity And Efficiency Analysis Of The Security And Defence Technological And Industrial Base In Spain," Defence and Peace Economics, Taylor & Francis Journals, vol. 24(2), pages 147-171, April.
    5. Khanna, Jyoti & Huffman, Wallace E. & Sandler, Todd, 1990. "The Demand for Agricultural Research by State Governments," ISU General Staff Papers 199012200800001218, Iowa State University, Department of Economics.
    6. Conybeare, John A C & Murdoch, James C & Sandler, Todd, 1994. "Alternative Collective-Goods Models of Military Alliances: Theory and Empirics," Economic Inquiry, Western Economic Association International, vol. 32(4), pages 525-542, October.
    7. Bernhard Klingen, 2011. "A Public Choice Perspective on Defense and Alliance Policy," Chapters,in: The Handbook on the Political Economy of War, chapter 17 Edward Elgar Publishing.
    8. Unal Tongur & Sara Hsu & Adem Yavuz Elveren, 2013. "Military Expenditures and Political Regimes: An Analysis Using Global Data, 1963-2001," ERC Working Papers 1307, ERC - Economic Research Center, Middle East Technical University, revised Jul 2013.
    9. Sayaka Yakita, 2011. "Fiscal decentralization, migration and economic growth," Regional Science Policy & Practice, Wiley Blackwell, vol. 3(4), pages 381-399, November.
    10. Claude Montmarquette, 1994. "L'importance relative des gouvernements : causes, conséquences, et organisations alternatives," CIRANO Papers 94c-03, CIRANO.

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