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

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