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To Wait or Not to Wait: Swiss EU-Membership as an Investment under Uncertainty


Why do some countries join the EU earlier than others, why do others wait? In order to address this question we apply the theory of investment under uncertainty (Dixit and Pindyck, 1994) to the decision on EU-membership. We present the idea in a simplified model of two periods to study how the value of waiting depends among other things on the expected benefits, the degree of uncertainty and the adjustment costs. The approach gives rise to a country’s position to deliberately postpone a membership in order to keep the option to join later if this is desirable. The model, thus, may explain delayed accession to the EU. We apply this framework to Switzerland by quantifying some of the crucial determinants of the value of waiting and qualitatively compare these findings with the experiences of other countries. We find evidence that adjustment costs are relatively high for Switzerland whereas net annual benefits are limited and subject to an increased degree of uncertainty.


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Correspondence to Beat Spirig.

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Reports by two anonymous referees and advice by the editor are gratefully appreciated. We also benefited from comments by Hans Genberg, Matthias Hagman, Carsten Hefeker and Daniel Hoechle, by participants at the Annual Meeting of the Swiss Society of Economics and Statistics in March 2004 to an early version of this paper, by attendants of the conference on Swiss EU-membership at the University of Basel in February 2007 and by participants of the research seminar at the Department of Economics of the University of Winnipeg in April 2007. Beat Spirig acknowledges financial support from the WWZ-Forum and the Europainstitute.

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Spirig, B., Weder, R. To Wait or Not to Wait: Swiss EU-Membership as an Investment under Uncertainty. Swiss J Economics Statistics 144, 85–114 (2008).

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