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Spring 2023

ISSN 0890-913X

Volume 38, Number 1

Information Externalities: A Further Note on the Market Provision of National Defense

Garrett R. Wood, Virginia Wesleyan University

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TheJournalofPrivateEnterprise38(1),2023,71-75InformationExternalities:AFurtherNoteontheMarketProvisionofNationalDefenseGarrettR.WoodVirginiaWesleyanUniversityAbstractMarketssufferfromafree-riderproblemintheprovisionofnationaldefense,butoffensealsosuffersfromafree-riderproblem.Anopportunisticcountrymayattempttocapturethespoilsgeneratedbyanothercountry’soffensiveefforts,orothercountriesmayfreelyenjoythesatisfactionofseeingahatedenemydefeatedbyacountrythatpaysforanoffensiveagainstit.Offensealsogeneratesapreviouslyunconsideredbenefitforfree-ridersintheformofvaluableinformationaboutthecapabilitiesoftheoffenseanddefense,andthescaleofthisbenefitisincreasingwithtechnologicalandeconomicadvancementaroundtheworld.JELCodes:F52,H10,H40Keywords:nationaldefense,free-riderproblem,anarchyI.IntroductionEconomicanalysisoftheprovisionofnationaldefensehastendedtofindinfavorofgovernmentprovisionovermarketprovisionbecauseofthefree-riderproblem.Marketprovisionofdefense,especiallyatthescaleofanentirenation,canproducebenefitstononpayers,whoarethereforeincentivizednottocontributetowardaservicetheyvalue,leavingthepopulationsomewhereshortofthetheoreticalwelfaremaximizingsupplyofdefense.Leeson,Coyne,andDuncan(2014;2016)notethatthefree-riderproblemsimultaneouslyhinderstheprovisionofnationaloffenseandthatitis,therefore,possiblethatevendefensethatdoesnotmeetthetheoreticallyoptimallevelmaybesufficienttodeteranonoptimaloffense.Thisargumentcanbeextendedtoincludeexternalbenefitsgeneratedbytheoffensethatwerenotconsideredbytheseauthors,andevidenceoftheseexternalbenefitsisavailableinthecurrentconflictinUkraine.Thisnotearguesthatinformationaboutthecombatantsgeneratedbytheactofaggressionisabenefitthat,thankstotechnologicaladvancement,isincreasinglyavailabletonotjustthevictimsofaggressionbutalsotheaggressor’snon-engagedenemiesandcompetitors.Moreover,thisinformationisgatheredanddistributed

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Metadata [hide]

Title	Information Externalities: A Further Note on the Market Provision of National Defense
Authors/Creators:	Garrett R. Wood, Virginia Wesleyan University
Year:	2023
Volume:	38
Number:	1
Pages:	71 - 75
Publisher:	The Association of Private Enterprise Education
ISSN:	0890-913X
Keywords:	national defense, free-rider problem, anarchy

Citation:
R. Wood, Garrett / 2023. "Information Externalities: A Further Note on the Market Provision of National Defense." The Journal of Private Enterprise, 38(1): 71-75.