IS THE DEFENCE MARKET CONTESTABLE? THE CASE OF MILITARY AEROSPACE

Cedric Laguerre

Defence and Peace Economics, 2009, vol. 20, issue 4, 303-326

Abstract: I demonstrate the existence of two sources of contestability in the military aerospace market, within producing and export countries, through the State's triple role as unique buyer, regulator and seller. For the producing countries, I introduce the new concept, 'sovereignty price'; that is, the profit a State agrees to grant to its defence firms to perpetuate their domestic activities. This subjective, evolutionary concept provides a dynamic character to the theory of contestable markets. Moreover, I show that contestability is more effective than antitrust policies and a solution of the cost disease. Empirical cases are shown to confirm the theoretical analysis.

Keywords: Common Operating System; Contestable markets; Cost disease; Aerospace; Regulation; Sovereignty price (search for similar items in EconPapers)
Date: 2009
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DOI: 10.1080/10242690802365044

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