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

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  • Spirig, Beat
  • Weder, Rolf

Abstract

Why do some countries join the EU earlier than others, why do others wait? In order to answer this question we apply the theory of investment under uncertainty (Dixit and Pindyck, 1994) to the decision on EU-membership. We develop a simplified model of two periods to study how the value of waiting depends among other things on the degree of uncertainty. The results give rise to a country's position to deliberately postpone a membership in order to keep the option to join later if this is desirable. After interpreting the results we apply the findings to the EU. We argue that the approach provides interesting insights regarding EU-membership, in general, and the Swiss position, in particular.

Suggested Citation

  • Spirig, Beat & Weder, Rolf, 2004. "To Wait or Not to Wait: Swiss EU-Membership as an Investment under Uncertainty," Working papers 2004/10, Faculty of Business and Economics - University of Basel.
    • Handle: RePEc:bsl:wpaper:2004/10
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    References listed on IDEAS

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    1. Andreas M. Fischer & Thomas J. Jordan & Caesar P. Lack, 2002. "Giving Up the Swiss Franc:Some Considerations on Seigniorage Flows under EMU," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 138(I), pages 61-82, March.
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    Keywords

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    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • F02 - International Economics - - General - - - International Economic Order and Integration

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