Book contents
- Frontmatter
- Contents
- Preface
- 1 The Importance of Arms Industries
- 2 The Facts
- 3 The Economics
- 4 The Importance of Government
- 5 Arms Industries: Structure and Conduct
- 6 Arms Industries: Performance
- 7 Buying Arms
- 8 The Military–Industrial–Political Complex
- 9 Disarmament, Conversion and Peace
- 10 The Future of Arms Industries
- References
- Index
5 - Arms Industries: Structure and Conduct
Published online by Cambridge University Press: 09 August 2023
- Frontmatter
- Contents
- Preface
- 1 The Importance of Arms Industries
- 2 The Facts
- 3 The Economics
- 4 The Importance of Government
- 5 Arms Industries: Structure and Conduct
- 6 Arms Industries: Performance
- 7 Buying Arms
- 8 The Military–Industrial–Political Complex
- 9 Disarmament, Conversion and Peace
- 10 The Future of Arms Industries
- References
- Index
Summary
Introduction: overview
Arms industries form the supply-side of arms markets. Typically, the major arms producers are large firms forming national monopolies, duopolies or oligopolies. US arms firms dominate the world industry (see Chapter 2). Examples include Lockheed Martin, Northrop Grumman and Raytheon, and they often operate in national oligopoly industries. European rivals include Airbus, BAE Systems, Leonardo and Thales, with these companies usually being national monopolies. In terms of firm size, a distinction can be made between absolute and relative size. Absolute size deals with firm size measured by absolute sales and employment numbers, whereas relative size focuses on firm size relative to the market or industry. For example, a large number of absolutely large and similar-sized firms forms a competitive industry compared with one absolutely large single supplier forming a monopoly.
Ownership differs between nations. Privately owned arms producers are typical of the US, the UK, Germany and Sweden. State-owned arms producers are typical in Brazil, Italy, China, India, Israel, Russia and South Africa. France has a mixed ownership model with variations of private and state ownership (but traditionally, state ownership has dominated). Public ownership is also typical for procurement agencies providing research advice to national governments, but the UK is an exception in that most of its former government research agencies have been privatized: QinetiQ is privately owned but the Defence Science and Technology Laboratory (DSTL) remains state owned.
Industry structure facts
Arms industries are continuously changing in size, structure and the organization of firms. War and peace have resulted in larger and smaller arms industries, respectively. Mergers, acquisitions, new entry and exits have affected industry structure. Company names often change and firms frequently change how their businesses are organized.
An example was the 1993 restructuring and reorganization of the US defence industry, which was characterized by mergers, acquisitions and exits. New names such as Lockheed Martin and Northrop Grumman emerged, while other names remained unchanged even though there were major acquisitions. For example, Boeing acquired McDonnell Douglas and Rockwell but retained its Boeing name. Raytheon acquired Chrysler Defence Electronics, Hughes Aircraft and part of Texas Instruments.
- Type
- Chapter
- Information
- The Economics of Arms , pp. 73 - 90Publisher: Agenda PublishingPrint publication year: 2017