Market-Provided National Defense

Newhard (2016) challenges our argument, according to which the inefficiency of market-provided national defense is an empirical question rather than a logical implication of the fact that privately provided national defense confronts a free-rider problem. We show that his argument holds only under the assumption that private contributions to public goods depend exclusively on the material benefits individuals expect to reap from such contributions. Empirically, this assumption is false. When private contributions to public goods do not depend exclusively on the material benefits individuals expect to reap from such contributions, the efficiency or inefficiency of market-provided national defense is, as our argument maintained, an (unanswered) empirical question.