Caveat EmptorCharles Mahoney sets out to answer the question “why do some markets for private defense services function efficiently while others are characterized by companies that regularly underperform and shirk their obligations?” (31) This is a puzzle with clear policy implications for governments around the world who may want to efficiently utilize private military and security companies (PMSCs).

More than just answering that question, Mahoney is interested in building theoretical explanations that serve as the basis for future academic work on PMSCs. To do this he uses the building blocks of market structure and a principal-agent framework. His central argument is that…

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