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The economics of defence industry mergers and J c divestitures
Author(s) -
Markusen Ann
Publication year - 1997
Publication title -
economic affairs
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.24
H-Index - 18
eISSN - 1468-0270
pISSN - 0265-0665
DOI - 10.1111/1468-0270.00055
Subject(s) - divestment , competitor analysis , mergers and acquisitions , consolidation (business) , incentive , diversification (marketing strategy) , economies of scale , business , economics , industrial organization , international trade , spillover effect , government (linguistics) , market economy , international economics , finance , marketing , microeconomics , linguistics , philosophy
High profile mergers in the 1990s have reduced major defence competitors to three in the USA and may evoke corresponding European consolidation and international mergers. The mergers may reduce capacity and help achieve economies of scale, but pose cost, quality and innovation concerns and have undermined diversification, conversion and civil/military integration. Expectations of enhanced political influence and short‐term financial returns as well as new, perverse government incentives help to explain why the mergers have occurred. Greater international cooperation, specialisation and trade and better analysis of the defence industrial base are recommended as antidotes for the negative impacts of the mergers.