Perfect Equilibrium in a Model of Competitive Arms Accumulation

Frederick (Rick) van der Ploeg and Aart de Zeeuw

International Economic Review, 1990, vol. 31, issue 1, 131-46

Abstract: This paper shows that the subgame-perfect Nash strategic equilibrium, which is relevant when countries can monitor their rival's weapon stock, leads to lower levels of arms and higher welfare than the standard open-loop Nash strategic equilibrium for an arms race. This result is derived for a model of competitive arms accumulation, in which two countries face a classic "guns versus butter" dilemma in the form of utilities that depend on consumption, leisure, and the characteristic defense. Moreover, it is argued that the perfect equilibrium strategies lead to a more satisfactory strategic underpinning of the well-know Richardson equations. Copyright 1990 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Date: 1990
References: Add references at CitEc
Citations: View citations in EconPapers (40)

Downloads: (external link)
http://links.jstor.org/sici?sici=0020-6598%2819900 ... O%3B2-S&origin=repec full text (application/pdf)
Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.

Related works:
Working Paper: Perfect equilibrium in a model of competitive arms accumulation (1990)
Working Paper: Perfect equilibrium in a model of competitive arms accumulation (1988)
Working Paper: Perfect equilibrium in a model of competitive arms accumulation (1988)
Working Paper: Perfect equilibrium in a model of competitive arms accumulation (1987)
Working Paper: Perfect equilibrium in a model of competitive arms accumulation (1987)
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:ier:iecrev:v:31:y:1990:i:1:p:131-46

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0020-6598

Access Statistics for this article

International Economic Review is currently edited by Harold L. Cole

More articles in International Economic Review from Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association 160 McNeil Building, 3718 Locust Walk, Philadelphia, PA 19104-6297. Contact information at EDIRC.
Bibliographic data for series maintained by Wiley-Blackwell Digital Licensing () and ().