An Empty Promise: Average Cost Savings And Scale Economies Among Canadian And American Manufacturers, 1910-1998
No 1002, Working Paper from Economics Department, Queen's University
During the debate that led up to the implementation of a bilateral free trade agreement between Canada and the U.S. on January 1, 1989, much was made of economists' claims that both nations could expect significant welfare improvements as a result of the removal of tariffs on traded goods. The welfare gains were expected to flow from average cost savings associated with the exploitation of scale economies. In this paper we show that it was overly optimistic to predict substantive reductions in average costs in the response to any increases in the scale of production among Canadian or American manufacturing firms. Therefore, ex ante we should have expected trade liberalization between Canada and the U.S. to have had only muted scale, average cost, and welfare effects.
Keywords: Economic History; Technology and Scale; Growth and Fluctuations (search for similar items in EconPapers)
JEL-codes: N12 N62 L61 (search for similar items in EconPapers)
Pages: 33 pages
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
https://www.econ.queensu.ca/sites/econ.queensu.ca/files/wpaper/qed_wp_1002.pdf First version 2001 (application/pdf)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:qed:wpaper:1002
Access Statistics for this paper
More papers in Working Paper from Economics Department, Queen's University Contact information at EDIRC.
Bibliographic data for series maintained by Mark Babcock ().