The European defence market is a misleading description since it comprises a set of independent national markets each with a variety of demand and supply arrangements. Nations differ in their defence procurement policies, with some European countries (for example, the UK) favouring a competitive procurement policy characterised by competition and fixed price contracts, whilst others have favoured preferential purchasing from national champions (for example, France). Even those nations which have been willing to open up their national markets to foreign firms have usually required some form of work-sharing for their domestic industry as part of the price of importing. Examples include licensed and co-production (for example, Belgium, Denmark, The Netherlands and Norway purchase of US F-16 aircraft) and offset agreements (for example, Spain’s purchase of US F-18 aircraft: Sandler
and Hartley 1995; Martin 1996). Typically, a nation’s procurement policy will be partly constrained by the extent of its national defence industrial base (DIB) and its desire and willingness to pay for independence, security of supply and the wider economic benefits which are believed to be associated with a national DIB (for example, jobs, technology and spin-offs).