ABSTRACT
Writing in 1980, military analyst Jacques Gansler documented the structure of the defense industry, the impact of that structure on research and development (R&D), and the peculiar problems of the industry faced by subcontractors and parts suppliers. The defense industry is a peculiar beast indeed. It is both oligopolistic and monopolistic and yet it differs significantly from the traditional oligopoly and monopoly market, in which the buyer and seller are essentially in adversarial bargaining positions. In defense, the buyer and seller have a far greater mutuality of interest—one in which price plays a relatively reduced role. 1 The Harvard Business School’s George Lodge once said, “It is a dangerous delusion to keep mumbling the old myths of free enterprise when they are irrelevant.” 2 In defense, they are irrelevant.
