Citation

Shefi Y, Tishler A. Def. Peace Econ. 2005; 16(6): 427-448.

Copyright

(Copyright © 2005, Informa - Taylor and Francis Group)

DOI

10.1080/10242690500167759

PMID

unavailable

Abstract

This paper models the interactions between the defense industry market structure and the defense needs of Israel, the USA and Western Europe, which produce several heterogeneous defense goods. The model specifies that the defense industries of the US and Europe are 'large' while that of Israel is 'small'. The US military aid to Israel is also an integral part of the model. The results show that net defense costs of Israel are minimal when the number of its defense firms is one. The model predicts that an increase in US military aid reduces Israel's government expenditure, its defense industry's profits and its net defense costs.