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s091 Conv Weapons
s091 Conv Weapons
Economics of Conflict,
War, and Peace
www
w.StoneGardenEconomics.com
Session 9.1
Capital: Major conventional weapons
-- Overview
-- Brauer/Williamson model
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Background (1)
Background (2)
High 20 25 27 30 32 26
income
co e [32]]
[3 [[26]
6]
states
Non-high 9 23 38 37 27 21
income [43] [39]
states
Brauer in Sandler/Hartley, 2007, p. 985.
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What is to be explained?
ΔT
k (asset
k* k** specificity)
is at an advantage relative to
out-of-state procurement
ΔT
k (asset
k** specificity)
k < k** k > k**
ΔC
ΔC > 0 ΔC < 0
ΔA
There is a value of k** below which in-state production
is at a disadvantage relative to out-of-state procurement
J. Brauer; Fall 2010 Economics of Conflict, War, and Peace
Chulalongkorn University Session 9.1 9
3
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ΔT’
ΔT
k (asset
k* k** specificity)
ΔC’
ΔC
ΔA
D ΔT’
ΔT
k (asset
k* k** k*** specificity)
ΔC’
ΔC
ΔA
4
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An extreme case
$
(valuation)
ΔT
k (asset
k*** k* k** specificity)
ΔC
ΔA
ΔA’ ΔC’
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Conclusion
Heuristically, the model makes some sense
It suggests that for the industry as a whole, agency efficiency,
technical efficiency, and asset specificity drive decisionmaking
behavior
The challenge now is to work up some real-world case studies and
to apply/refine the model; convert from post-hoc to make predictions