The Market for Foreign Bases

Abstract

Power projection is a central means by which states exert influence. Conventional wisdom holds that states pay more for foreign bases in the presence of third-party competitors, yet the mechanisms by which competition shapes the costs of bases are both theoretically underspecified and empirically understudied. This article tests three mechanisms by which competition can shape the price of access: denial, crowding out, and information. We study the behavior of the United States in Africa, using new data on US compensation and bases and qualitative evidence from the US presence in Djibouti. Our findings suggest that China’s economic incentives have crowded out the effectiveness of US economic incentives in securing access. We further show that Djiboutian leaders escalated their demands for US compensation as other base-seekers entered the market due to a combination of US efforts to limit its rivals’ access and Djibouti’s learning about the value of its real estate.