DoD Profit Policy and Capital Investment in the Military Aircraft Industry

Abstract

The purpose of this research was to conduct an economic analysis of a selected set 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.

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Document Details

Document Type
Technical Report
Publication Date
Mar 01, 1990
Accession Number
ADA228384

Entities

People

  • Matthew S Goldberg
  • Thomas P. Frazier
  • Thomas R. Gulledge Jr.

Organizations

  • Institute for Defense Analyses

Tags

Communities of Interest

  • Air Platforms

DTIC Thesaurus Topics

  • Aerospace Industry
  • Aircraft Industry
  • Budgets
  • Business Administration
  • Capital Investments
  • Contractors
  • Contracts
  • Department Of Defense
  • Economic Analysis
  • Governments
  • Hypotheses
  • Investments
  • Maintenance
  • Manufacturing
  • Military Aircraft
  • Money
  • Standards

Readers

  • Defense Acquisition Program Management
  • Military Logistics and Supply Chain Management
  • Public Financial Management and Budgeting