A Research On Problems Of R&D Cost-reimbursement In Weapon And Military Equipment

The R&D of weapon and military equipment play a more and more important role in modern wars, however, in market economy, there is underinvestment because of the characteristics of R&D in weapon and military equipment So the government and army need to incite the R&D sectors by cost-reimbursement in order to make the R&D sectors'investment achieve the social optimal level.Our country has been attaching importance to R&D cost-reimbursement in weapon and military equipment. But, because of multiple principal-agent relationship and asymmetric information, there are some weak points in cost-reimbursement. I analyze these weak points in detail. On the basis of weak points analyzed above, Firstly, I construct a model about expenditure of cost-reimbursement between the government and army. Then, I analyze the monopoly R&D and competitive R&D separately. I believe that monopoly R&D cost-reimbursement in weapon and military equipment can't make the society optimal, but it can be improved and competitive R&D cost-reimbursement in weapon and military equipment can make the society optimal by a two stages'auction mechanism.According to the theory analysis and a typical case, some advices are summarized as follow, increasing R&D cost-reimbursement in weapon and military equipment to accelerate R&D's development, especially increasing fundamental R&D cost-reimbursement to improve our capability of innovation, sticking to unproportionate strategy and develop deterrence weapon, leading market mechanism in R&D of weapon and military equipment, encouraging competition to improve cost-reimbursement efficiency, implementing contestant-selection auction, and army's good credit to make sure the cost-reimbursement is effective.