October 15, 2004

Economic consequences of buying corvettes; a welfare-theoretic analysis

Nu aanschaffen korvetten is economisch niet gunstig

Press release
Het nu kopen van korvetten geeft economisch minder voordeel dan uitstel van een besluit over mogelijke aanschaf van marineschepen in 2015.

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The costs of the purchase of the corvettes appear to be greater than the benefits related to (the delay of) avoidance of once-only adjustment costs due to a loss of jobs. The costs consist of government support in the form of the option value, pre-finance and the guarantee to purchase from the Dutch naval shipbuilding cluster. Policy makers should weigh the welfare-theoretic benefits of delaying a decision after 2015 against the value of possibly less fighting power during 2006-2015 and the loss of national identity, because the Netherlands cannot proudly present itself with a fleet of its own design and make. Finally, preserving a naval shipbuilding cluster in the Netherlands is likely to require government support time and again.

This publication is in Dutch.

Authors

Bert Minne

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