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Summer 2016

ISSN 0890-913X

Volume 31, Number 2

Categories: Summer 2016 | National Defense

A Note on the Market Provision of National Defense: Comment

Joseph Michael Newhard, East Tennessee State University

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TheJournalofPrivateEnterprise31(2),2016,79–86ANoteontheMarketProvisionofNationalDefense:CommentJosephMichaelNewhardTexasA&MUniversity______________________________________________________AbstractIn“ANoteontheMarketProvisionofNationalDefense”(Leeson,Coyne,andDuncan2014),theauthorsarguethatthepublicgoodsofbothnationaldefenseandnationalaggressionwillbeunderproducedundervoluntaryprovision.Theyconcludethatifunderproductionofnationalaggressionissevereenoughrelativetothatofnationaldefense,voluntaryprovisionmaybesufficienttoachievetheefficientlevelofdefense.Imakethecasethatthismechanismdoesnotresultinthevoluntaryprovisionofdefenseattheefficientlevel.______________________________________________________JELCodes:F52,H41,L33Keywords:publicgoods,nationaldefense,voluntaryprovisionAsfirstnotedbyOlson(1965),thevoluntaryprovisionofpublicgoodsamonglargegroupsisexpectedtoresultinunderproductionrelativetotheefficientlevelasfirstdefinedbySamuelson(1954)duetothelargetransactioncostsinvolved.Beingnonexcludable,consumerfree-ridingleadsmarketprovisionofgoodssuchasnationaldefensetofallshortofefficiency.In“ANoteontheMarketProvisionofNationalDefense”Leeson,Coyne,andDuncan(2014)rightlyobservethatsincetherearealsononexcludablebenefitsofnationalaggression,it,too,mustbeconsideredapublicgoodthatwillbeunderproduced.Theyconcludethatiftheunderproductionofaggressionisrelativelysevereenough,thenthelevelofdefensethatisachievedthroughvoluntaryprovisionmaybeefficientafterall.However,theirreasoningisnotadequatelydynamic.Itisthethreatofnationalaggressionbyforeignpowersthatmakesnationaldefensedesirabletoconsumers.Theefficientlevelofdefenseisdeterminedinpartbythepotentiallevelofaggressionthatconsumersfaceandtheirestimationoftheprobabilityofbeingattacked;theefficientlevelrisesandfallsdirectlywiththeirperceptionofthethreatofaggression.Asthethreatofaggression

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Metadata [hide]

Title	A Note on the Market Provision of National Defense: Comment
Authors/Creators:	Joseph Michael Newhard, East Tennessee State University
Year:	2016
Volume:	31
Number:	2
Pages:	79 - 86
Publisher:	The Association of Private Enterprise Education
ISSN:	0890-913X
Document Type:	Articles
Keywords:	public goods, national defense, voluntary provision

Citation:
Newhard, Joseph Michael / 2016. "A Note on the Market Provision of National Defense: Comment." The Journal of Private Enterprise, 31(2): 79-86.