Voluntary military alliances, such as NATO, are often criticized for failing to exploit the opportunities for equipment standardization and free trade. However, nationalism means that governments adopt a variety of industrial policies for purchasing defense equipment, leading to departures from...

This chapter defines defense economics and indicates how it differs from other subfields of economics. The nature and topics of defense economics are presented. A brief history of the field is also reviewed. The current importance of defense economics in the post-cold war era is discussed....