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Flexible Integration? Mandatory and Minimum Participation Rules

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  • Bard Harstad

Abstract

For a club such as the European Union, an important question is whether a subset of the members should be allowed to form "inner clubs" and enhance cooperation. Flexible cooperation allows members to participate if and only if they benefit, but it leads to free-riding when externalities are positive. I show that flexible cooperation is better if the heterogeneity is large and the externality small, but that rigid cooperation is the political equilibrium too often. Both regimes, however, are extreme variants of a more general system combining mandatory and minimum participation rules. For each rule, I characterize the optimum and the equilibrium. Copyright The editors of the "Scandinavian Journal of Economics" 2006 .

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Scandinavian Journal of Economics.

Volume (Year): 108 (2006)
Issue (Month): 4 (December)
Pages: 683-702

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Handle: RePEc:bla:scandj:v:108:y:2006:i:4:p:683-702

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Web page: http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1467-9442

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Cited by:
  1. Erik Berglöf & Mike Burkart & Guido Friebel & Elena Paltseva, 2009. "Club-in-the-Club: Reform under Unanimity," EPRU Working Paper Series 2009-07, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
  2. Erik Berglof & Mike Burkart & Guido Friebel & Elena Paltseva, 2008. "Widening and Deepening: Reforming the European Union," American Economic Review, American Economic Association, vol. 98(2), pages 133-37, May.
  3. Leo Wangler & Juan-Carlos Altamirano-Cabrera & Hans-Peter Weikard, 2013. "The political economy of international environmental agreements: a survey," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 13(3), pages 387-403, September.
  4. Bernard M. Hoekman & Petros C. Mavroidis, 2013. "WTO 'à la carte' or WTO 'menu du jour'? Assessing the case for Plurilateral Agreements," RSCAS Working Papers 2013/58, European University Institute.
  5. Baron, David P., 2011. "Credence attributes, voluntary organizations, and social pressure," Journal of Public Economics, Elsevier, vol. 95(11), pages 1331-1338.
  6. Pierre Courtois & Guillaume Haeringer, 2012. "Environmental cooperation: ratifying second-best agreements," Public Choice, Springer, vol. 151(3), pages 565-584, June.

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