Free Riding, Network Effects, and Burden Sharing in Defense Cooperation Networks

Abstract

How do states distribute the burdens of collective defense? This paper develops a network theory of burden sharing. We focus on bilateral defense cooperation agreements (DCAs), which promote cooperation in a variety of defense, military, and security issue areas. Using a computational model, we show that DCA partners’ defense spending depends on the network structure of their agreements. In bilateral terms, DCAs increase defense spending by committing states to defense activities and allowing partners to reciprocally punish free riding. However, as a state's local network of defense partnerships grows more densely connected, with many transitive “friend of a friend” relations, DCAs have the countervailing effect of reducing defense spending. The more deeply integrated states are in bilateral defense networks, the less they spend on defense. We distinguish two potential mechanisms behind this effect—one based on efficiency improvements, the other on free riding. An empirical analysis using multilevel inferential network models points more to efficiency than to free riding. Defense networks reduce defense spending, and they do so by allowing countries to produce security more efficiently.

Grasping Foreign and Security Policy Change: Patterns and Conditions of Change Among Liberal Democracies

“…Another interpretation of this finding is, as indicated above, that states seem to adapt their military components rather incrementally, even in view of systemic reconfigurations, such as the end of the Cold War. The analysis also shows that NATO membership is associated with a decrease in military expenditure, which may reflect that NATO members are particularly open to reducing military capacities due to free-riding on the US (see Kinne & Kang, 2023). Interestingly, open capital markets are associated with a strengthening of the military component, which may indicate that these countries also assume more military responsibility to uphold open trading routes.…”