Born in the tense early years of the Cold War, conflict economics has long been interested in arms rivalry, proliferation, and arms control. In this chapter we provide a summary of key principles and research results in this historically important branch of conflict economics. We begin with definitions followed by an empirical overview of military spending, weapons of mass destruction, and arms control treaties. We then return to the historical roots of conflict economics by sketching the seminal arms race models of Richardson and Intriligator and Brito. To these we add a rational choice model that highlights the interdependence of economics and security in issues of defense spending, arms rivalry, and arms control. Applications to historical and contemporary arms rivalries are presented, including possible proliferation of nuclear weapons to Iran, strategic implications of deployment of US antiballistic missile technology in Europe, and decay of the Soviet economy during the Cold War. We also briefly survey selected empirical studies, focusing on the structure of interstate arms rivalries, arms racing and the risk of war, and risk factors for nuclear weapons proliferation.

Definitions

An arms rivalry is a competitive increase in the weapons quantities or qualities of two or more parties. Arms rivalries are typically thought of as occurring between states, but they can also occur within states and can involve transnational groups.