Abstract
Customs unions are frequently suggested to have a salutary effect upon the efficiency of production. However, this is not part of received customs union theory. It is shown that the essence of the competitive ‘cold shower’ is very difficult to accommodate in standard theory, given its underlying theory of intrafirm behaviour, the assumed nature of competitive firm behaviour and the static framework. Neither can it be satisfactorily worked into X-inefficiency theory. A Schumpeterian view of competitive firm behaviour can explain how the customs union will be perceived by certain firms as an opportunity, causing them to intensify experiments and search for new forms of production, attempt new intrafirm decison rules and change market behaviour.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
