“Disarmament Market” Effects of Information Disclosures

Abstract

In yet another wave of discussion on nuclear disarmament among political scientists and practitioners, one of the topical issues concerns the problem of transparency, its mechanisms, costs, and benefits. Numerous—though often abstract—calls for greater transparency of nuclear arsenals and postures when promoting the idea of nuclear disarmament, however, do not give a clear rationale for states possessing nuclear weapons to pursue greater transparency. Meanwhile, many other research fields—such as economics and psychology—attempt to address problems related to the lack of exact information on the counterpart's activities and intentions. Economics offers one probable analog for the transparency problem: the issue of information asymmetry and its consequences. This article is an attempt to apply the classical model of a market with information asymmetry to the analysis of the transparency problem within the nuclear disarmament process. Such an approach could help pave the way for closer cooperation between economic and political scientists in the nuclear disarmament field.

KEYWORDS:

• Nuclear disarmament
• transparency
• economic theory

Notes

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3. U.S. Legal.com, “Distinction Between Joint Venture and Joint Enterprise,” <http://jointventures.uslegal.com/distinction-between-joint-venture-and-joint-enterprise/>.

4. One recent example was a joint statement by the Permanent Five (P5) nuclear weapon states: “The P5 reaffirmed their commitment to the shared goal of nuclear disarmament and general and complete disarmament as provided for in Article VI of the NPT…,” Joint Statement of Fourth P5 Conference: on the Way to the 2015 NPT Review Conference, Geneva, April 18–19, 2013, <www.mid.ru/brp_4.nsf/0/173DAA4DECF02DF144257B55004D2A08>.

5. Israel is widely believed to have been the sixth state in the world to develop nuclear weapons, but it has never officially confirmed the existence of a nuclear weapon program or arsenal.

6. Richard Rosecrance, The Rise of the Trading State: Commerce and Conquest in the Modern World (New York, NY: Basic Books, 1986).

7. Richard Rosecrance, “The Rise of the Virtual State,” Foreign Affairs 75 (July/August 1996), pp. 45-61.

8. George P. Shultz, William J. Perry, Henry A. Kissinger, and Sam Nunn, “Next Steps in Reducing Nuclear Risks: The Pace of Nonproliferation Work Today Doesn't Match the Urgency of the Threat,” Wall Street Journal, March 5, 2013, <www.nti.org/analysis/opinions/next-steps-reducing-nuclear-risks-pace-nonproliferation-work-today-doesnt-match-urgency-threat/>.

9. Bernard I. Finel and Kristin M. Lord, “Transparency and World Politics,” in Bernard I. Finel and Kristin M. Lord eds., Power and Conflict in the Age of Transparency (New York, NY: Palgrave Macmillan, 2002), p. 3.

10. Paul M. Healy, Krishna G. Palepu, “Information asymmetry, corporate disclosure, and the capital markets: A review of the empirical disclosure literature,” Journal on Accounting and Economics 31 (September 2001), pp. 405-40, <http://tippieweb.iowa.uiowa.edu/accounting/mcgladrey/winterpapers/kothari1.pdf>.

11. Healy and Palepu, “Information asymmetry, corporate disclosure, and the capital markets,” p. 407.

12. Michael Welker, “Disclosure Policy, Information Asymmetry, and Liquidity in Equity Markets,” Contemporary Accounting Research 11 (Spring 1995), pp. 801–27.

13. Healy and Palepu, “Information asymmetry, corporate disclosure, and the capital markets,” p. 406

14. Kristin M. Lord, The Perils and Promise of Global Transparency: Why the Information Revolution May Not Lead to Security, Democracy, or Peace (Albany, NY: State University of New York Press, 2006), p. 14.

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16. Akerlof, “The Market for ‘Lemons’,” pp. 489-90.

17. Akerlof, “The Market for ‘Lemons’,” p. 495.

18. Treaty on Non–Proliferation of Nuclear Weapons, March 5, 1970, Article VI, <www.un.org/disarmament/WMD/Nuclear/NPTtext.shtml>.

19. UN General Assembly Resolution 2028 (XX), Non–proliferation of nuclear weapons, November 19, 1965, <http://daccess-dds-ny.un.org/doc/RESOLUTION/GEN/NR0/217/91/IMG/NR021791.pdf?OpenElement>.

20. Christopher A. Ford, “Debating Disarmament: Interpreting Article VI of the Treaty on the Non–Proliferation of Nuclear Weapons,” Nonproliferation Review 14 (November 2007), p. 403.

21. Treaty on Non–Proliferation of Nuclear Weapons, Article IX, para. 3, <www.un.org/disarmament/WMD/Nuclear/NPTtext.shtml>.

22. UK Atomic Weapons Establishment [Christine Comley, Mike Comley, Peter Eggins, Garry George, Steve Holloway, Martin Ley, Paul Thompson, Keith Warburton], “Confidence, Security & Verification: The challenge of global nuclear weapons arms control,” 2000, <www.fissilematerials.org/library/awe00.pdf>.

23. Akerlof, “The Market for ‘Lemons’,” pp. 499-500.

24. Akerlof, “The Market for ‘Lemons’,” pp. 499-500.

25. Akerlof, “The Market for ‘Lemons’,” pp. 499-500.