Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/68066 
Year of Publication: 
2003
Series/Report no.: 
Department of Economics Discussion Paper No. 03,04
Publisher: 
University of Kent, Department of Economics, Canterbury
Abstract: 
Owing to the WTO exemption that allows governments to subsidise arms exports, the arms trade is one of the few remaining areas of trade where we observe lump-sum and per unit transfers to exports. This paper examines the effect of arms controls, in the form of licensing delays, on the incentives to subsidise arms exports and conversely the effect of the WTO arms trade exemption on the incentives to break arms control agreements. Our main result is that arms controls and free trade commitments re-enforce each other. Licensing delays reduce the incentive to subsidise and free trade without subsidies reduces the benefits of a unilateral abrogation of arms controls. Transparency actually worsens the Nash inefficiencies at play in that incomplete information leads to lower subsidies and lower arms exports.
Subjects: 
arms export controls
export subsidies
World Trade Organisation
JEL: 
F12
O31
Document Type: 
Working Paper

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