Military alliances: Theory and empirics
In: Handbook of Defense Economics
This chapter provides an overview of the main theoretical and empirical findings in the economics of military alliances. The pure public and joint product models are presented along with the empirical methods used to test them. Issues concerning burden sharing and strategic doctrine in the NATO alliance are discussed. Comparisons between the Nash and Lindahl allocation processes are made by presenting the empirical work that has attempted to distinguish between them. Attention is also given to the median-voter model and to alternative technologies of public good supply.
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