Economics of Alliances: The Lessons for Collective Action

This essay provides an up-to-date summary of the findings of the literature on the economics of alliances. We show that the study of the economics of alliances has played a pivotal role in understanding and applying public good analysis to real-world applications. We establish that the manner in which alliances address burden sharing and allocative issues is related to strategic doctrines, weapon technology, perceived threats, and membership composition. Past contributions are evaluated, and areas needing further development are identified. The theoretical and empirical knowledge gained from the study of alliances is shown to be directly applicable to a wide range of international collectives.

[1]  T. Schelling.  The Strategy of Conflict , 1963 .

[2]  Roland N. McKean,et al.  Economics of Defense , 1964 .

[3]  J. M. Buchanan,et al.  An Economic Theory of Clubs , 1965 .

[4]  M. Olson,et al.  The Logic of Collective Action , 1965 .

[5]  R. Zeckhauser,et al.  An economic theory of alliances , 1966 .

[6]  Collective Goods, Comparative Advantage, and Alliance Efficiency , 1967 .

[7]  Jacques van Ypersele de Strihou.  Sharing the Defense Burden Among Western Allies , 1967 .

[8]  Public Expenditures in Communist and Capitalist Nations. , 1969 .

[9]  J. M. Jackson.  Public Expenditures in Communist and Capitalist Nations , 1969 .

[10]  B. Russett,et al.  Collective Goods and International Organization , 1971, International Organization.

[11]  What Price Vigilance? The Burdens of National Defense. By Russett Bruce M.. (New Haven and London: Yale University Press, 1970. Pp. xii, 261. $7.50.) , 1972 .

[12]  A Collective Goods Analysis of the Warsaw Pact after Czechoslovakia , 1974 .

[13]  O. Williamson.  Markets and hierarchies, analysis and antitrust implications : a study in the economics of internal organization , 1975 .

[14]  Todd Sandler,et al.  On the Economic Theory of Alliances , 1975 .

[15]  Leonard M. Dudley.  Foreign Aid and the Theory of Alliances , 1979 .

[16]  T. Sandler,et al.  The Design of Supranational StructuresAn Economic Perspective , 1977 .

[17]  Todd Sandler,et al.  IMPURITY OF DEFENSE: AN APPLICATION TO THE ECONOMICS OF ALLIANCES , 1977 .

[18]  Burden sharing in NATO , 1979 .

[19]  T. Sandler,et al.  BURDEN SHARING, STRATEGY, AND THE DESIGN OF NATO , 1980 .

[20]  Ronald Smith,et al.  The Demand for Military Expenditure , 1980 .

[21]  C. Montmarquette,et al.  The demand for military expenditures: An international comparison , 1981 .

[22]  Mancur Olson,et al.  The Rise and Decline of Nations: Economic Growth, Stagflation, and Social Rigidities. , 1983 .

[23]  U.S. Assistance, Israeli Allocation, and the Arms Race in the Middle East , 1982 .

[24]  Todd Sandler,et al.  A Theoretical and Empirical Analysis of NATO , 1982 .

[25]  J. Hirshleifer.  From weakest-link to best-shot: The voluntary provision of public goods , 1983 .

[26]  Todd Sandler,et al.  EASY RIDERS, JOINT PRODUCTION, AND PUBLIC GOODS* , 1984 .

[27]  B. Nalebuff,et al.  Dragon-slaying and ballroom dancing: The private supply of a public good , 1984 .

[28]  Todd Sandler,et al.  Complementarity, free riding, and the military expenditures of NATO allies , 1984 .

[29]  A Method for Identifying the Public Good Allocation Process Within a Group , 1985 .

[30]  J. Murdoch,et al.  AUSTRALIAN DEMAND FOR MILITARY EXPENDITURES: 1961 ‐ 1979* , 1985 .

[31]  Todd Sandler,et al.  The Theory of Externalities, Public Goods, and Club Goods , 1986 .

[32]  H. Varian,et al.  On the private provision of public goods , 1986 .

[33]  Game theory in international economics , 1986 .

[34]  T. L. Schwartz.  The Logic of Collective Action , 1986 .

[35]  Todd Sandler,et al.  NATO Burden-sharing: Rules or Reality? , 1987 .

[36]  Wallace J. Thies.  Alliances and Collective Goods , 1987 .

[37]  Bruce R. Kingma.  An Accurate Measurement of the Crowd-out Effect, Income Effect, and Price Effect for Charitable Contributions , 1989, Journal of Political Economy.

[38]  Mark A. Boyer.  Trading Public Goods in the Western Alliance System , 1989 .

[39]  Ronald Smith.  Models of military expenditure , 1989 .

[40]  J. O'neal,et al.  NATO Burden Sharing and the Forces of Change , 1989 .

[41]  Neil Bruce,et al.  Defence Expenditures by Countries in Allied and Adversarial Relationships , 1990 .

[42]  Mark A. Boyer.  A simple and untraditional analysis of western alliance burden‐sharing , 1990 .

[43]  J. Murdoch,et al.  On distinguishing the behavior of nuclear and non‐nuclear allies in NATO , 1990 .

[44]  Glenn Palmer.  Alliance Politics and Issue Areas: Determinants of Defense Spending , 1990 .

[45]  M. McGuire.  Mixed public‐private benefit and public‐good supply with application to the NATO alliance , 1990 .

[46]  T. Sandler,et al.  The Triple Entente and the Triple Alliance 1880–1914: A Collective Goods Approach , 1990, American Political Science Review.

[47]  John R. Oneal,et al.  The theory of collective action and burden sharing in NATO , 1990, International Organization.

[48]  J. Murdoch,et al.  Nash-Cournot or Lindahl Behavior?: An Empirical Test for the NATO Allies , 1990 .

[49]  J. O'neal.  Testing the Theory of Collective Action , 1990 .

[50]  Glenn Palmer.  Corralling the Free Rider: Deterrence and the Western Alliance , 1990 .

[51]  Kar-yiu Wong.  Foreign trade, military alliance, and defence‐burden sharing , 1991 .

[52]  Keith Hartley,et al.  The economics of defence policy , 1991 .

[53]  B. Hilton,et al.  The McGuire model and the economics of the NATO alliance , 1991 .

[54]  Glenn Palmer.  Deterrence, defense spending, and elasticity: Alliance contributions to the public good , 1991 .

[55]  M. Okamura.  Estimating the Impact of the Soviet Union's Threat on the United States-Japan Alliance: A Demand System Approach , 1991 .

[56]  J. Murdoch,et al.  NATO Burden Sharing and the Forces of Change: Further Observations , 1991 .

[57]  S. Mills.  The Financing of UN Peacekeeping Operations: The Need for a Sound Financial Basis , 1991 .

[58]  J. Murdoch,et al.  An Econometric Technique for Comparing Median Voter and Oligarchy Choice Models of Collective Action: The Case of the NATO Alliance , 1991 .

[59]  S. Mehay,et al.  Burden sharing in the NATO alliance: An empirical test of alternative views , 1991 .

[60]  J. D. Morrow.  Alliances and Asymmetry: An Alternative to the Capability Aggregation Model of Alliances , 1991 .

[61]  Todd Sandler,et al.  The Economics of defence spending : an international survey , 1992 .

[62]  John A. C. Conybeare.  A Portfolio Diversification Model of Alliances , 1992 .

[63]  J. O'neal.  Budgetary savings from conscription and burden sharing in NATO , 1992 .

[64]  Todd Sandler,et al.  Collective Action: Theory and Applications , 1992 .

[65]  Robert Powell,et al.  Guns, Butter, and Anarchy , 1993, American Political Science Review.

[66]  Cooperative versus Noncooperative Behavior: The Case of Agricultural Research , 1993 .

[67]  Todd Sandler,et al.  Tropical Deforestation: Markets and Market Failures , 1993 .

[68]  R. Axelrod,et al.  A Landscape Theory of Aggregation , 1993, British Journal of Political Science.

[69]  J. Murdoch,et al.  Alternative Collective-Goods Models of Military Alliances: Theory and Empirics , 1994 .

[70]  J. D. Morrow.  Alliances, Credibility, and Peacetime Costs , 1994 .

[71]  Todd Sandler,et al.  The comparative static properties of the impure public good model , 1994 .

[72]  Todd Sandler,et al.  AGRICULTURAL RESEARCH EXPENDITURES IN THE UNITED STATES: A PUBLIC GOODS PERSPECTIVE , 1994 .

[73]  Randall L. Schweller.  Bandwagoning for Profit: Bringing the Revisionist State Back In , 1994 .

[74]  Paul W. Schroeder.  Historical Reality vs. Neo-realist Theory , 1994 .

[75]  Steven L. Rearden.  NATO’s Strategy: Past, Present, and Future , 1995 .

[76]  T. Sandler,et al.  Management of Transnational Commons: Coordination, Publicness, and Treaty Formation , 1995 .

[77]  Todd Sandler,et al.  Handbook of Defense Economics , 1995 .

[78]  A. Roberts.  From San Francisco to Sarajevo: The UN and the use of force , 1995 .

[79]  Roger H. Palin.  Multinational Military Forces: Problems and Prospects , 1995 .

[80]  NATO after the January 1994 Summit: The View from Brussels , 1995 .

[81]  Richard L. Kugler,et al.  NATO expansion: The next steps , 1995 .

[82]  S. Hill,et al.  Peacekeeping and the United Nations , 1996 .

[83]  Todd Sandler,et al.  Nato burden sharing: 1960–1992 , 1996 .

[84]  Ronald D. Asmus,et al.  What will NATO enlargement cost , 1996 .

[85]  R. Cornes,et al.  The theory of externalities, public goods and club goods. 2nd. ed. , 1996 .

[86]  Todd Sandler,et al.  Global Challenges: An Approach to Environmental, Political, and Economic Problems , 1997 .

[87]  America and Europe : a partnership for a new era , 1997 .

[88]  Todd Sandler,et al.  Conscription, peace‐keeping, and foreign assistance: NATO burden sharing in the post‐cold war era , 1997 .

[89]  Todd Sandler,et al.  A Tale of Two Collectives: Sulphur versus Nitrogen Oxides Emission Reduction in Europe , 1997 .

[90]  T. Sandler,et al.  The Economics of Defense , 1995 .

[91]  Mark A. Boyer,et al.  Maintaining System Stability , 1997 .

[92]  J. Murdoch,et al.  The voluntary provision of a pure public good: The case of reduced CFC emissions and the Montreal Protocol , 1997 .

[93]  T. Sandler.  Global and regional public goods: a prognosis for collective action , 1998 .

[94]  Kenneth W. Abbott,et al.  Why States Act through Formal International Organizations , 1998 .

[95]  When does Partial Cooperation Pay , 1998 .

[96]  T. Sandler,et al.  Sharing the Financial Burden for U.N. and NATO Peacekeeping, 1976-1996 , 1998 .

[97]  Todd Sandler,et al.  Equilibrium Existence and Uniqueness in Public Good Models: An Elementary Proof Via Contraction , 1999 .

[98]  Todd Sandler,et al.  Alliance Formation, Alliance Expansion, and the Core , 1999 .

[99]  T. Sandler,et al.  The Demand for Un Peacekeeping, 1975-1996 , 1999 .

[100]  David A. Lake.  Entangling Relations: American Foreign Policy in Its Century , 2001 .

[101]  Todd Sandler,et al.  The political economy of NATO : past, present, and into the 21st century , 1999 .

[102]  Keith Hartley,et al.  NATO Burden-Sharing: Past and Future , 1999 .

[103]  Scott Barrett.  Montreal versus Kyoto , 1999 .

[104]  T. Sandler,et al.  The Future of Development Assistance: Common Pools and International Public Goods , 1999 .

[105]  Inge Kaul,et al.  Global Public Goods: International Cooperation in the 21st Century , 1999 .

[106]  A. Dixit.  Mancur Olson--Social Scientist , 1999 .

[107]  Glenn Palmer,et al.  Multiple Goals or Deterrence , 1999 .

[108]  D. Kelleher.  Global Public Goods: International Cooperation in the 21st Century , 2000 .

[109]  Todd Sandler,et al.  Partners in giving:: The crowding-in effects of UK government grants , 2000 .

[110]  Toshihiro Ihori.  Defense Expenditures and Allied Cooperation , 2000 .

[111]  J. Murdoch,et al.  On Sharing NATO Defence Burdens in the 1990s and Beyond , 2000 .

[112]  L. Potvin,et al.  A theoretical and empirical analysis of context: neighbourhoods, smoking and youth. , 2002, Social science & medicine.