An empty promise: Average cost savings and scale economies among Canadian and American manufacturers, 1910 - 1988

Arbeitspapier

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 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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Queen's Economics Department Working Paper ; No. 1002

Classification and Topics

• Classification: Wirtschaft ; Economic History: Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations: U.S.; Canada: 1913- ; Economic History: Manufacturing and Construction: U.S.; Canada: 1913- ; Metals and Metal Products; Cement; Glass; Ceramics
• Subject: Economic History ; Technology and Scale ; Growth and Fluctuations ; Produktionskosten ; Skalenertrag ; Handelbares Gut ; Handelsabkommen ; USA ; Kanada

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Keay, Ian
• Event: Veröffentlichung
• (who): Queen's University, Department of Economics
• (where): Kingston (Ontario)
• (when): 2001

Further information

• Handle: http://hdl.handle.net/10419/67818
• Last update: 10.03.2025, 11:45 AM CET