Economists for Peace and Security

The Economics of Peace and Security Journal

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A publication by Economists for Peace and Security

Short-term versus long-term military planning
Ronen Bar-El, Kobi Kagan, and Asher Tishler

Vol 4, No 1 - Symposia on Defense innovation | Conflict theory and micro-level analysis, January 2009

This article analyzes the allocation of the government budget to civilian and military expenditure by two rival countries that are involved in an arms race. We compare the consequences of myopic (period by period) planning versus rational (long-term) planning and show that although myopic planning is always favorable for both countries, they are likely to become locked in a prisoners’ dilemma equilibrium in which they plan rationally. The prisoners’ dilemma equilibrium results in higher stocks of weapon systems and lower welfare for both countries. We also find some evidence of the existence of a prisoners’ dilemma equilibrium in the current Israeli-Syrian arms race. Generally, this article suggests that solving military/political conflicts that evolve into an arms race by relying only on military might is an expensive and suboptimal solution. Each country should identify this phenomenon and attempt to take it into account in its decisionmaking by using appropriate policy alternatives. There are two major policy options in this case. The first option is to reach some kind of agreement with the rival (directly or through a third party). The second option is to institute force multipliers techniques. [Keywords: arms race, intertemporal defense budget allocation, prisoners’ dilemma. JEL codes: D74, D78, D90, H56, H68]

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