Citation

Rogerson WP. Defence economics 1991; 2(3): 235-249.

Copyright

(Copyright © 1991, Informa - Taylor and Francis Group)

DOI

10.1080/10430719108404695

PMID

unavailable

Abstract

This paper analyzes a set of observations by the Congressional Budget Office (CBO) on individual weapons systems regarding whether large amounts of excess capacity exist and whether short run average cost (SRAC) appears to be severely decreasing. It is shown that the amount of excess capacity and steepness of SRAC are essentially independent of output rate. It is then argued that this suggests that production is occurring in inefficiently large plants—i.e.—off the long run cost curve.