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The Accession of the UK to the EC: A Welfare Analysis

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  • Michael Gasiorek
  • Alasdair Smith
  • Anthony J. Venables

Abstract

This article provides a decomposition of the welfare impact on the UK arising from the changes in manufacturing trade consequent upon joining the EC. The methodology employed is that of computable general equilibrium (CGE) modelling, where the underlying model is based on trade under imperfect competition with firms producing under conditions of increasing returns to scale. CGE models can be seen as providing numerical illustrations of theory, or as empirical tools providing estimates of policies. A second aim of this article is then to asses the extent to which CGE models can be used as serious tools of policy analysis. We examine this by assessing the success of the model in replicating counterfactual outcomes. The results indicate (i) that the model does reasonably well in replicating complex reality and that such models can be empirically useful; (ii) that a substantial portion of the welfare impact is attributed to distortions associated with imperfect competition, and that the impact is potentially quite large.

Suggested Citation

  • Michael Gasiorek & Alasdair Smith & Anthony J. Venables, 2002. "The Accession of the UK to the EC: A Welfare Analysis," Journal of Common Market Studies, Wiley Blackwell, vol. 40(3), pages 425-447, September.
    • Handle: RePEc:bla:jcmkts:v:40:y:2002:i:3:p:425-447
    DOI: 10.1111/1468-5965.00363
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    Cited by:

    1. Portuese, Aurelien, 2018. "Towards a Meta Cost-benefit Analysis: The Case of Brexit," Estey Centre Journal of International Law and Trade Policy, Estey Centre for Law and Economics in International Trade, vol. 19(1), June.
    2. Aidan Islyami, 2009. "Trade in Intermediate Producer Services under Imperfect Competition," FIW Working Paper series 020, FIW.
    3. Overman, Henry George & Winters, L. Alan, 2003. "Trade shocks and industrial location: the impact of EEC accession on the UK," LSE Research Online Documents on Economics 121691, London School of Economics and Political Science, LSE Library.
    4. Crafts, Nicholas, 2016. "The Growth Effects of EU Membership for the UK: a Review of the Evidence," CAGE Online Working Paper Series 280, Competitive Advantage in the Global Economy (CAGE).
    5. Willenbockel, Dirk, 2004. "Specification choice and robustness in CGE trade policy analysis with imperfect competition," Economic Modelling, Elsevier, vol. 21(6), pages 1065-1099, December.
    6. Helena Marques, 2008. "Trade And Factor Flows In A Diverse Eu: What Lessons For The Eastern Enlargement(S)?," Journal of Economic Surveys, Wiley Blackwell, vol. 22(2), pages 364-408, April.

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