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Weapons development is done by the government, DARPA, DDA etc. With some contracts handed out to private firms such as QinetiQ etc.

Weapons companies such as bae systems, Lockheed etc are given a 5 year £$20bn bounty, claimable at the end of that time period. As well as an amount to produce the weapons they have contracted for at zero profit (the bounty is the profit)

Everytime any of the weapons the company has produced is used, a value gets deducted from the bounty.

So peace = profit
War = less profit
Big war = no profit
Big enough war = total bankruptcy with production taken over by gov (as the bounty can go into the negative)

After all, money makes the world go round