A two-stage game theoretic model is developed in which firms in two producer blocs (the United States and Western Europe) produce a homogeneous defense good and sell it to their own governments and to the rest of the world. The security levels of the two producer blocs depend on their purchase...

This study presents an analytical model of budget allocation into military and civilian expenditures within an arms race between two rival countries and compares the consequences of shortsighted (period-by-period) planning versus forward-looking (long-term) planning. The authors show that...