Concentration in Military Procurement Markets

A Classification and Analysis of Contract Data

by James W. McKie

Download eBook for Free

FormatFile SizeNotes
PDF file 1.3 MB

Use Adobe Acrobat Reader version 10 or higher for the best experience.

Develops an industry classification system for military procurements and, using Department of Defense (DOD) purchase data, estimates concentration in these industries. The study derives 4-firm concentration ratios on an industry basis and also estimates the proportion of each industry's sales going to the DOD. These ratios are compared with conventional DOD concentration measures as well as nondefense concentration ratios. Results show that unilateral buyer and seller monopolies are both rare in defense markets, the typical situation is bilateral market power, and the 100 largest defense contractors vary greatly in the percentage of military sales. The concentration figures suggest that new economic models of market relationships are needed to analyze the economics of defense markets. Also, a market dimension should be added to the DOD procurement data.

This report is part of the RAND Corporation Research memorandum series. The Research Memorandum was a product of the RAND Corporation from 1948 to 1973 that represented working papers meant to report current results of RAND research to appropriate audiences.

This document and trademark(s) contained herein are protected by law. This representation of RAND intellectual property is provided for noncommercial use only. Unauthorized posting of this publication online is prohibited; linking directly to this product page is encouraged. Permission is required from RAND to reproduce, or reuse in another form, any of its research documents for commercial purposes. For information on reprint and reuse permissions, please visit www.rand.org/pubs/permissions.

The RAND Corporation is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.