The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Defence Economics

  • Keith Hartley
  • Martin C. McGuire
Reference work entry


Defence economics is a new field of economics. Its development and research agenda have reflected current events. Examples include the superpower arms race of the cold war, disarmament following the end of the cold war, international terrorism, peacekeeping and conflict. A brief history is presented; the field is defined and the facts of world military spending are outlined; the defence economics problem, namely, the need for difficult choices, is considered; and conflict and terrorism are used to illustrate some of the new developments in the field.


Arms races Arms trade Cost-plus contracts Crowding out Defence economics Disarmament costs Economic theories of military alliances Ethnicity European Security and Defence Policy (EU) Fixed-price contracts Free rider problem Game theory Military employment contract Military outsourcing Military wage differential Military–industrial complex Nationalism One-shot games Principal and agent Private finance initiatives Procurement Public–private partnerships Purchasing power parity Religion Repeated games Research and development Strategic behaviour Substitution effect Substitution principle Technology Terrorism, economics of Tit for tat Two world wars, economics of the Voting paradoxes War and economics 

JEL Classifications

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Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Keith Hartley
    • 1
  • Martin C. McGuire
    • 1
  1. 1.