Oxford University's Phillip Killicoat sure knows how to pick a paper title. Weaponomics: The Global Market for Assault Rifles" is like a spectacular car wreck on the freeway -- you just can't avert your eyes. (Thanks to the Private Sector Development blog for the link.)
Killicoat's goal is to understand what factors play a role in the varying price of Kalashnikov AK-47 assault rifles across the world. For example, AK-47s are much, much cheaper -- by an average of over $200 -- in African countries than anywhere else. Why is this so?
It is postulated that this staggering Africa-discount is predominantly driven by porous borders. Since borders are more porous than elsewhere, the trade in assault rifles across the African continent approaches a deregulated market in which prices converge and there are only negligible trade barriers that arms supply must overcome to meet demand. At any one time, only a few African countries have very high demand for weapons due to conflict. This demand profile across the continent changes over time as localized tensions rise and recede. Porous borders enable the entire supply of weapons on the African continent to meet whichever country currently has high weapons demand.
Killicoat's number-crunching also suggests that in countries with strong regulatory regimes, the price of an AK-47 goes up, presumably because they are more difficult to obtain.
But the most intriguing thing to me in Killicoat's paper was his explanation for why the AK-47 is the weapon of choice for brutal civil war antagonists throughout the world.
The AK-47's popularity is generally attributed to its functional characteristics; ease of operation, robustness to mistreatment and negligible failure rate. The weapon's weaknesses -- it is considerably less accurate, less safe for users, and has a smaller range than equivalently calibrated weapons -- are usually overlooked, or considered to be less important than the benefits of its simplicity. But other assault rifles are approximately as simple to manage, yet they have not experienced the soaring popularity of the Kalashnikov.
The AK-47's ubiquity could alternatively be explained as a result of a path dependent process. Economic historians recognize that an inferior product may persist when a small but early advantage becomes large over time and builds up a legacy that makes switching costly. In the case of the AK-47 that early advantage may be that as a Soviet invention it was not subject to patent and so could be freely copied.
The QWERTY keyboard may be the most famous example of path dependent lock in, although the triumph of the VHS cassette format over Sony's Betamax gives it a run for the money. But the intellectual property aspect of the AK-47's ubiquity adds a fresh angle. Despite all the whining that proprietary software companies do about "piracy," the industry has long been aware that it's not always such a bad thing to have everyone illicitly copying your products. Get everybody hooked, and then start selling the upgrades, or support services, or other nifty add-ons. For open-source software companies, the strategy is a fundamental plank of the basic business model.
Who knew? The Soviet Union's AK-47 -- the world's most popular open-source assault rifle. No wonder a picture of the gun is part of Mozambique's flag.