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Concentration in the International Arms Industry¤

Author

Listed:
  • J Paul Dunne

    (University of the West of England)

  • Maria Garcia Alonso

    (University of Kent)

  • Paul Levine

    (University of Surrey)

  • Ron Smith

    (Birkbeck College. University of London)

Abstract

The end of the Cold War led to a large drop in world military expenditure, rising fixed costs of developing weapons because of technological changes and a reduction of national preference for domestic weapons. Alongside these developments has been an increase in concentration in the world arms industry, which at the end of the Cold War had been very unconcentrated with concentration ratios close to the Sutton lower bound. This paper provides an empirical and theoretical analysis of this process. It examines the dynamics of the evolution of concentration and then shows that a trade model with optimal procurement decisions can capture the main features of this empirical analysis.

Suggested Citation

  • J Paul Dunne & Maria Garcia Alonso & Paul Levine & Ron Smith, 2003. "Concentration in the International Arms Industry¤," Working Papers 0301, Department of Accounting, Economics and Finance, Bristol Business School, University of the West of England, Bristol.
    • Handle: RePEc:uwe:wpaper:0301
    as

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    File URL: http://carecon.org.uk/DPs/0301.pdf
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    References listed on IDEAS

    as
    1. John Sutton, 1997. "Gibrat's Legacy," Journal of Economic Literature, American Economic Association, vol. 35(1), pages 40-59, March.
    2. Mary Carmen Garcia-Alonso, 1999. "Price competition in a model of arms trade," Defence and Peace Economics, Taylor & Francis Journals, vol. 10(3), pages 273-303.
    3. Hart, Peter E & Oulton, Nicholas, 1996. "Growth and Size of Firms," Economic Journal, Royal Economic Society, vol. 106(438), pages 1242-1252, September.
    4. Krugman, Paul R., 1979. "Increasing returns, monopolistic competition, and international trade," Journal of International Economics, Elsevier, vol. 9(4), pages 469-479, November.
    5. Dunne, J. Paul, 1995. "The defense industrial base," Handbook of Defense Economics, in: Keith Hartley & Todd Sandler (ed.), Handbook of Defense Economics, edition 1, volume 1, chapter 14, pages 399-430, Elsevier.
    6. Benassy, Jean-Pascal, 1996. "Taste for variety and optimum production patterns in monopolistic competition," Economics Letters, Elsevier, vol. 52(1), pages 41-47, July.
    7. Dunne, Paul & Hughes, Alan, 1994. "Age, Size, Growth and Survival: UK Companies in the 1980s," Journal of Industrial Economics, Wiley Blackwell, vol. 42(2), pages 115-140, June.
    8. Paul Levine & Ron Smith, 2000. "Arms Export Controls and Proliferation," Journal of Conflict Resolution, Peace Science Society (International), vol. 44(6), pages 885-895, December.
    9. Sandler,Todd & Hartley,Keith, 1995. "The Economics of Defense," Cambridge Books, Cambridge University Press, number 9780521447287.
    10. Smith, R. P., 1990. "Defence procurement and industrial structure in the U.K," International Journal of Industrial Organization, Elsevier, vol. 8(2), pages 185-205, June.
    11. repec:nsr:niesrd:77 is not listed on IDEAS
    12. Ron Smith, 2001. "The International Arms Industry Since the End of the Cold War," World Economics, World Economics, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 2(3), pages 155-166, July.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. García-Alonso, María D.C. & Levine, Paul, 2008. "Strategic procurement, openness and market structure," International Journal of Industrial Organization, Elsevier, vol. 26(5), pages 1180-1190, September.
    2. Margherita Comola, 2009. "Democracies, politics and arms supply: A bilateral trade equation," PSE Working Papers halshs-00585982, HAL.
    3. Gangopadhyay Partha, 2014. "A Formal Model of Arms Market with Cash-for-Favours," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 20(3), pages 1-18, August.
    4. Paul Dunne & Maria del Carmen Garcia-Alonso & Paul Levine & Ron Smith, 2005. "Military Procurement, Industry Structure and Regional Conflict," Studies in Economics 0502, School of Economics, University of Kent.

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    More about this item

    Keywords

    market structure; arms industry; procurement;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General

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