Cost-exchange ratio

In anti-ballistic missile defence the cost-exchange ratio is the ratio of the incremental cost to the aggressor of getting one additional warhead through the defence screen, divided by the incremental cost to the defender of offsetting the additional missile.

In practice, this means the marginal cost of a ballistic missile vs the marginal cost of an interceptor missile plus any marginal costs associated with upgrading radars and data processing equipment. In the early part of the Cold War, the cost-exchange ratio favoured the defender, since the cost of missiles increases rapidly with size, and interceptors are generally much smaller than ballistic missiles.

This gave a strong impetus to the development and deployment of anti-ballistic missiles in the 60's. However, the deployment of Multiple Independently Targetable Re-entry Vehicles (MIRV's) required the defender to deploy multiple interceptors for each enemy missile, thus skewing the cost-exchange ratio in favour of the aggressor.

Consideration of cost-exchange ratios was influential in persuading the United States and the Soviet Union to sign the ABM Treaty.