Citation

Levine P, Sen S, Smith R. Def. Peace Econ. 1994; 5(1): 1-18.

Copyright

(Copyright © 1994, Informa - Taylor and Francis Group)

DOI

10.1080/10430719408404776

PMID

unavailable

Abstract

Sales of arms are a significant component of international trade and raise a range of pressing policy issues. After a short review of the market, this paper provides a formal model of the trade which allows for competing forward-looking suppliers whose welfare depends on both the economic benefits from the sales and the security repercussions of recipient behaviour. The recipient's behaviour depends on its military capability, a function of the stock of arms it has acquired. We first examine a myopic recipient, whose behaviour depends on current stocks, then a forward looking recipient for whom questions of the time-consistency and the credibility of supplier threats to embargo or promises to resupply become crucial. Finally we examine the impact of supplier cooperation of the sort currently being discussed in the UN Security Council.