A RENT-SEEKING MODEL OF INTERNATIONAL COMPETITION AND ALLIANCES

This paper presents an alternative approach for analyzing international competition and alliances as rent-seeking contests that are able to capture the impure public good nature of defense spending. Two-country Cournot and Stackelberg games are considered and comparative static results derived. A three-country model is investigated, and alliance behavior is explored in the context of this rent-seeking model. The conjecture that an alliance may become less effective if the allies' interests become more closely aligned is verified. Finally, the model is generalized, and a Nash-Cournot equilibrium is computed.