How to Pay for the Peace? A Theoretical Framework with References to African Countries.

This paper analyzes a simple game-theoretic model to highlight the choice of the government between raising its defense expenditures or giving away some 'gifts' to his opponents as a means to defend his position in power. If the government is a Cournot-Nash player, then there is no gift in equilibrium and any increase in the budget will lead to more inefficient defense expenditures. However, if the government is a Stackelberg leader, then he will use the gift as a tool in his policy for staying in power. Copyright 1995 by Kluwer Academic Publishers