Publicness, Scale, and Spillover Effects in Defense Spending

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Abstract
In this article the theory of bureaucracy is used to analyze the collective choice mechamsm for determining military spending. The model integrates economies of size in military output from both the consumption (publicness) and production (scale) sides. Spillover effects on a nation's military spending from its allies and rivals are also investigated. The empirical results reveal significant differences between groups of nations in the net economies of country size and in the direction and magnitude of spillover effects. In addition, spillover effects appear to differ between types of allies, depending on whether they are members of formal alliances.