An Analysis of the Defence Industrial Market Based on Agents

ABSTRACTThis article analyses the defence industrial market using an agent-based model. The model draws a simplified version of the sector regarding the market agents and their conduct based on empirical data and commonly observed micro-regularities. Its computer implementation is initially tested on a simple scenario to verify its realism. Afterwards, some specific scenarios, caused by government industrial policies, are assessed. The main finding is the capability of the model to reproduce the behaviour of market agents and to replicate the evolution of the macroeconomic indicators and patterns normally seen under different, but common conditions and policies (e.g. free market, discriminatory procurement, licensed production or multilateral development and production). This suggests a powerful tool for gaining further insight and exploring government policies in this important economic sector.