ABSTRACT
Any critical appraisal of weapons standardisation policy has to start from the assumptions of the model used to estimate the maximum cost savings. North Atlantic Treaty Organization as a collective body is likely to value highly the standardisation aspects of alternative procurement policies, whereas a European member of the Alliance might be more concerned with promoting high technology. This chapter establishes a general information framework for assessing alternative procurement policies, which can be adapted and used in a variety of perspectives. A full cost or average cost pricing model is assumed, with weapons prices based on unit costs plus a profit mark-up. The worry about monopoly pricing is reinforced when it is remembered that the estimated gains from standardisation also depend upon a nation’s pricing policy for recovering its research and development costs on major weapons. Firms are assumed to be technically efficient, with the scale curves representing cost-minimising behavior.
