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Market Structure and Technical Efficiency of Spanish Defense Contractors


  • Néstor Duch-Brown
  • Antonio Fonfría
  • Elisa Trujillo-Baute


This paper uses an output-oriented stochastic distance function to compute defense contractors' technical efficiency as a measure of performance. Then, nesting a market structure and conduct equation into the frontier, we identify firm and industry factors that affect the observed inefficiency levels. The empirical results confirm that there exist multi-directional causal correlations among market structure, conduct, and performance of defense contractors. In addition, the paper shows that there exists a great variability among the different sectors that compose the defense industrial base. Therefore, policies oriented to influence the industry must take into account the multi-directional causal relation among its components.

Suggested Citation

  • Néstor Duch-Brown & Antonio Fonfría & Elisa Trujillo-Baute, 2014. "Market Structure and Technical Efficiency of Spanish Defense Contractors," Defence and Peace Economics, Taylor & Francis Journals, vol. 25(1), pages 23-38, February.
  • Handle: RePEc:taf:defpea:v:25:y:2014:i:1:p:23-38
    DOI: 10.1080/10242694.2013.857461

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    References listed on IDEAS

    1. Fulvio Castellacci & Arne Fevolden, 2014. "Capable Companies or Changing Markets? Explaining the Export Performance of Firms in the Defence Industry," Defence and Peace Economics, Taylor & Francis Journals, vol. 25(6), pages 549-575, December.
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