ABSTRACT
Weapons procurement policies will be influenced by the views of producer groups and budget-conscious procurement agencies. This chapter outlines the basic economics of the aerospace industry. Aerospace markets consist of buyers and sellers within two major sectors, namely military and civil, each with a set of sub-markets. Aerospace is an example of a dynamic market subject to government protection and regulation. Learning is a major source of productivity improvement in aerospace. Typically, United States learning curves have steeper slopes than in Europe, implying greater savings on unit production costs for each doubling in cumulative output. Competitive solutions and a North Atlantic Treaty Organization (NATO) free trade area in weapons are obviously attractive to the potential beneficiaries, namely voters and taxpayers. The list of major obstacles to collaboration was sufficiently diverse and extensive to explain the general failure of NATO weapons standardisation policies. Nationalism and government interference were given as major barriers.
