Research On Competitive Defense Acquisition

As a basic feature, competitions are applicable to Defense Acquisition. But on deferent market structures, competitions influence the price of weapons differently. On the market of monopsony-monopolistic competition structure, the buyer may use its market power to pull the prices of weapons down to the costs. On the market of monopsony-oligopoly structure, "Bertrand Paradox" may lead the price to the costs, too. On the market of bilateral monopoly structure, however, the prices of weapons, which are often more higher than ordinary level due to asymmetric information, are decided by negotiations or bargaining.Generally considering, to guarantee the avail of the Army, minimum of weapons prices are should be the one of the aims of defense acquisition. But in long run, the competitions of defense acquisition should not just aim at the minimum of weapons prices, but make them rational. So it is important to establish the new concept of "Competitive Acquisition". That is, it is important to foster the competitors of the Army as a buyer on the market where the Army have the Market Power, and to foster the competitors of sellers on the market where the Army have imperfect information. Obviously, the competitions among buyers generally emerge on the stage of spares or subsystems, even on the levels of productivity.But on the market of monopsony, it is necessary to distinguish between the Competition Structure and the Competition Action on the seller's side. In another word, even there are many sellers pursuing maximal profits on the market of monopsony, it is uncertain whether the Competition Action can emerge or not. As to defense acquisition, the realization of Competitive Acquisition depends on not only the establishments of open-door defense industrial base and Modern Corporation System of Military Corporation to build the Competition Structure, but the strengthening of dominative power of the Army in Acquisitions, the establishment of organization of competitive system and of the mechanisms of incentive, appraisement and supervisal on the Army side, and the perfection of laws, to develop the Competition structure to the Competition Action. More, there are differences too between the Competition Structure and the Competition Action on the buyer's side because of the Army's administration power, which should be restrained to realize the Competition Action.