Is Bigger Better? Concentration, Competition, and Defense Contracting Outcomes
In recent years, economists and policymakers have expressed heightened concern over industrial concentration and the potential for monopolies in a number of sectors of the U.S economy, ranging from retail trade and manufacturing to finance and utilities. These concerns extend to the U.S. defense industry, which the nation depends upon to equip its military with a wide array of mission-essential goods and services.
Growing concentration may hinder competition, reduce the availability of key supplies and equipment, and diminish vendors’ incentives for innovation and performance in government contracts. On the other hand, countries with comparatively smaller or less developed industrial bases often seek to promote consolidation, hoping national champion firms will gain the economies of scale to compete internationally. Even the United States encouraged consolidation during the post-Cold War drawdown in the 1990s, a policy that was announced to the defense industry at what is evocatively referred to as “The Last Supper.”
CSIS undertook a study examining the relationship between industrial concentration and competition with U.S. defense acquisition performance outcomes. An expert panel will discuss the results of this study, and the larger issues.
This event is made possible through general support to CSIS.