01747cam a22002177 4500001000600000003000500006005001700011008004100028100002600069245010400095260006600199490004100265500001600306520088300322530006101205538007201266538003601338710004201374830007601416856003701492w3025NBER20131220125520.0131220s1990 mau||||fs|||| 000 0 eng d1 aLichtenberg, Frank R.10aHow Elastic is the Government's Demand for Weapons?h[electronic resource] /cFrank R. Lichtenberg. aCambridge, Mass.bNational Bureau of Economic Researchc1990.1 aNBER working paper seriesvno. w3025 aApril 1990.3 aWe attempt to make inferences about the elasticity of the government's demand for specific weapons by analyzing the statistical relationship between quantity and cost revisions across the population of major weapon systems, using data contained in the Pentagon's Selected Acquisition Reports. The cost revisions are due in part to the arrival of technological information generated in the course of research and development. When we standardize the data by program base year, we find that the elasticity of demand is .55, and is significantly different from both zero and unity. Thus, the governments demand for specific weapons is inelastic, but not perfectly inelastic. The estimates also imply that weapons acquisition is characterized by increasing returns: the mean and median values of the elasticity of total cost with respect to quantity are .78 and .72, respectively. aHardcopy version available to institutional subscribers. aSystem requirements: Adobe [Acrobat] Reader required for PDF files. aMode of access: World Wide Web.2 aNational Bureau of Economic Research. 0aWorking Paper Series (National Bureau of Economic Research)vno. w3025.4 uhttp://www.nber.org/papers/w3025