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| Srl | Item |
| 1 |
ID:
129825
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| Publication |
2014.
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| Summary/Abstract |
Since the 1960s Olson-Zeckhauser's (1966) analysis, its 'exploitation of the great by the small' has provided economists' core model of alliance's provision of security/defense. But with the end of the Cold War, countries' allocative behavior has diverged markedly from OZ's predictions for defense as a homogeneous pure public good voluntarily provided. This paper suggests a replacement for OZ, with the essential difference that 'defense' rather than being aggregated into their single public good is disaggregated into more realistic categories of self-insurance and self-protection. Because allocative behavior in public good groups is essentially driven by income effects, we concentrate on these, which become complex and conflicted, giving much greater scope for goods-inferiority. The analysis is followed by numerical simulations, which conform to actual experienced allocations in NATO much better than the conventional 'exploitation' model.
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| 2 |
ID:
172142
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| Summary/Abstract |
For 2011–2017, this paper revisits NATO burden sharing in light of recent developments and pledges to bolster members’ defense shares of GDP to 2%. Russian nationalism, enhanced transnational terrorism, and intrastate conflicts are apt to increase the publicness of NATO defense spending over the last eight years. When NATO allies’ defense shares of GDP are correlated with their GDP ranks, there is clear evidence of the exploitation of the large, rich allies by the small, poor allies, indicative of allies sharing purely public defense spending since 2011. Such exploitation and free riding has rarely been seen after 1967. In addition, there is an absence of concordance between NATO allies’ defense burdens and their derived benefit shares, consistent with greater defense publicness. Finally, we find further proof of exploitation and free riding for a broad-based measure of security spending.
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