Hierarchy of Membership and Burden Sharing in a Military Alliance

Shlomo Weber, Yuval Weber and Hans Wiesmeth

No 13965, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: he paper introduces a model of military alliance financed through its members’ contributions. The member countries vary on four dimensions: GDP per capita, population, “awareness of the alliance†, and the place in the alliance hierarchy. The latter refers to the situation where some countries can be considered as “leaders†or even “super-leaders†whose contribution decisions determine the response of the “followers†. The interaction between the countries is modeled by means of the Penrose-Stackelberg mechanism that yields a unique equilibrium and identifies the factors that determine the patterns of burden-sharing in an alliance. We then apply our theoretical setting to NATO and conduct an empirical investigation of our model. The paper evaluates the differences in burden sharing along political, military, and economic dimensions, specifically NATO’s goal for member-states to spend 2% of GDP on defense, and demonstrates that alliance “awareness†and place in the alliance hierarchy due to historical factors can explain whether NATO states meet their burden-sharing goal.

Keywords: Alliances; Public goods; Burden sharing; Free riding; Multi-stage penrose-stackelberg equilibrium; Nato (search for similar items in EconPapers)
JEL-codes: C72 D62 D74 H41 (search for similar items in EconPapers)
Date: 2019-08
New Economics Papers: this item is included in nep-gth
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