Source: EconLog
by Pierre Lemieux
“Substitution is an important concept in economics, whether we consider the consumer or the producer, and whether the latter produces bubble gum or, like a state, national defense. If the price of a good (or service) increases relative to the price of other goods, a rational consumer will partly substitute another one that is anyhow substitutable according to his own preferences. Similarly, if the price of an input increases relative to the price of another, a rational producer will substitute some of the latter for some of the former. … There is much formal theory explaining the rationality of such substitutions …. the theory also applies to a rational government or army, which does not make formal profits but is instead interested in maximizing its production of defense (or aggression) output, at least up to a point (in more sophisticated theories of the state, other maximands also exist).” (10/15/24)
https://www.econlib.org/war-and-the-economic-concept-of-substitution/