Guns and Butter: Stability and Robustness

Choi Gyoung-Gyu ()
Additional contact information
Choi Gyoung-Gyu: Department of Business Administration, Dongguk University, 30, Pildong-ro 1-gil, Jung-gu, Seoul 04620, Korea, Phone: +822-2260-8919

Asian Journal of Law and Economics, 2020, vol. 11, issue 1, 8

Abstract: The paper considers the problem of allocating resources to economic goods and military goods (protecting property rights) in a contest model under an anarchic system which can be defined by the absence of a common superior authority to each state. I characterize the equilibrium and discuss its stability and robustness. The main finding is that if economic goods of the two states are complementary with Cobb-Douglas utility characteristics, the essential factor that affects a state’s resource allocation is its own maximum military level of production out of its resource endowment. In this sense, there is a unique stable equilibrium. This equilibrium is robust with the sequence of the states’ decisions insofar as the second mover’s observability is imperfect even slightly.

Keywords: contest; defense economics; guns and butter; international security; strategic complementarity (search for similar items in EconPapers)
JEL-codes: D72 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1515/ajle-2020-0006 (text/html)
For access to full text, subscription to the journal or payment for the individual article is required.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bpj:ajlecn:v:11:y:2020:i:1:p:8:n:5

Ordering information: This journal article can be ordered from
https://www.degruyter.com/journal/key/ajle/html

DOI: 10.1515/ajle-2020-0006

Access Statistics for this article

Asian Journal of Law and Economics is currently edited by Noriyuki Yanagawa

More articles in Asian Journal of Law and Economics from De Gruyter
Bibliographic data for series maintained by Peter Golla ().