A BRAVE LEAP OR A GRADUAL CLIMB? THE DYNAMICS OF INVESTMENT IN R&D OF INTEGRATIVE TECHNOLOGIES

Oren Setter and Asher Tishler

Defence and Peace Economics, 2006, vol. 17, issue 3, 201-222

Abstract: Our paper explores the optimal investment in integrative technologies (such as command and control systems), which are a major part of defense R&D at the beginning of the 21st century. Employing a dynamic optimization framework, we find that under linear development costs, it may be optimal or nearly optimal to build military forces using a myopic, short-termed, approach. In such cases, it would be optimal to transform an armed force into a network-centric environment within just a few years. When development costs are convex however, early investment in technological infrastructure is required, extending the transformation period over more than a decade.

Keywords: Technology; Defense R&D; Dynamic optimization (search for similar items in EconPapers)
Date: 2006
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Citations: View citations in EconPapers (2)

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DOI: 10.1080/10242690600645100

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