Second-Best Markets: On the Hidden Efficiency of Defense Offsets

Ever since the first Bush administration issued a statement in 1990 saying that defense offsets are inefficient and market distorting, the consensus has been that offsets are bad economics. One commentator has noted that this refrain has taken on a mantra-like quality. But what if that isn’t true? Drawing lessons from the literature on countertrade and the theory of the second best, this book argues that offsets may be a rational response to imperfect markets. It holds that the push for a ban should be postponed and that this question requires further study.

Mr. Schoeni has been with the U.S. Air Force since 2004. He is a graduate of Brigham Young University, the University of Iowa, and The George Washington University, and is a Ph.D. candidate at the University of Nottingham.