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How not to pay for the war
Authors:Murray Wolfson  Robert Smith
Affiliation:Department of Economics , California State University‐Fullerton , Fullerton, CA, 92634
Abstract:As a result of allied subsidy and the influence of sunk costs, the marginal cost of the Gulf War to the US was reduced to negligible size. This result is at variance with the Olson‐Zeckhauser thesis that in an alliance “the small exploit the large.” A game theoretic alternative explanation suggests that the relation between allies resembles the game of Chicken, successfully played by the US. The ability to shift the marginal costs of war in the short term raises questions about the possible underestimation of long term effects.
Keywords:Gulf war  burden sharing  games between allies  US defense policy
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