The Economics of Small Arms

Since its inception, the Small Arms Survey has compiled information on various aspects of small arms and light weapons, including total weapons numbers, the value of overall trade, and the specific impacts of weapons misuse. There is one indicator, however, that has not yet been systematically collected—price. Prices communicate information: they contain detail on valuation and scarcity. Since weapons are generally durable goods, there is an active secondary market that makes weapons prices observable. Documenting and analysing global price variations of a representative class of weapon (the Kalashnikov) can help identify key drivers of changes in the small arms market. By identifying factors that influence the market, policy-makers can better determine which policy instruments may be used to curb small arms proliferation. Researchers and journalists have produced a significant amount of survey and case study work on the small arms trade. Insight can be provided by compiling this wealth of survey data—along with that garnered from close investigation of single cases—into a format suitable for statistical analysis. Drawing on archives of journalistic accounts and field reports, a dataset has been constructed that allows for a preliminary statistical analysis of a representative segment of the small arms market—that for Kalashnikov assault rifles. Collecting and coding data on weapons prices across countries is not a simple task. Which exact weapon should be observed? What condition was the weapon in? Where was the weapon bought? Who was buying the weapon? These are some of the many issues involved with collecting price data. This chapter does not provide an exhaustive or definitive record of global weapons prices. Instead, it represents a first attempt at documenting Kalashnikov prices and offers a basis for further efforts to deepen our understanding of the small arms market. In order to understand this market, it is necessary to view it as a function of the incentives and constraints faced by buyers, suppliers, and regulators. This chapter introduces a basic demand-and-supply model of the small arms market and then, using the model, applies statistical analysis to the newly compiled price data. As with other commodities , the trade in weapons responds to the forces of demand and supply. Although the trade in weapons is generally subject to official restrictions, trade on illicit markets is nevertheless flourishing. The demand side of the market is modelled by adapting the means and motivation framework of Brauer and Muggah (2006). On the supply side, …