DOD Profit Policy and Capital Investment in the Military Aircraft Industry

摘要

The purpose of this research was to conduct an economic analysis of a selectedset of contractors in the military aircraft manufacturing industry. Specifically, two questions were addressed: (1) Are changes in the progress payment rate inversely related to changes in the firms' capital/labor ratios, and (2) Has the DOD profit policy succeeded in promoting investment in capital facilities and equipment. These questions were tested statistically using time-series data. We found no evidence that the progress payment rate was inversely related to changes in the capital/labor ratio. As for the facilities capital markup, we found that the markup rate seems to promote investment in capital facilities and equipment.