Journal of Economic Perspectives: Vol. 8 No. 4 (Fall 1994)


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Competition Policy, Rivalries, and Defense Industry Consolidation

Article Citation

Kovacic, William E., and Dennis E. Smallwood. 1994. "Competition Policy, Rivalries, and Defense Industry Consolidation." Journal of Economic Perspectives, 8(4): 91-110.

DOI: 10.1257/jep.8.4.91


Declining outlays for new weapons programs have triggered a process of consolidation that promises to shrink the U.S. defense industry drastically. Consolidation in the defense industry raises complex competition policy issues that are not amenable to conventional antitrust merger analysis. This paper presents a framework for identifying important contractor competencies, assessing rivalries in defense industry segments, and evaluating the competitive effects of mergers and other consolidation events. As applied to antitrust oversight and to Department of Defense funding, program, and acquisition strategy decisions, this framework can help preserve supply alternatives for developing state-of-the-art weapons needed to satisfy national security requirements.

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Kovacic, William E. (George Mason U)
Smallwood, Dennis E. (RAND Corporation, Santa Monica, CA)

JEL Classifications

H56: National Security and War


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