Models of international unions suggest that large and rich countries reap little economic benefits from political integration with smaller and poorer countries. This paper challenges this view by presenting a formal study of economic influence by special interest groups in an international union. We first show that countries where more groups are organized to lobby gain from political integration on economic grounds. The reason is that a more organized country, under a political union, can affect policies in the other country to its advantage, something that a less organized country can do to a lesser extent. We then argue that richer countries will tend to have more organized interest groups before political integration and show that this will continue to be the case afterward. Hence, the model implies that there are costs and benefits of EU Enlargement to Eastern Europe in addition to those suggested by the existing literature.
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Paper provided by European University Institute in its series Economics Working Papers with number
ECO2004/30.
Length: Date of creation: 2004 Date of revision: Handle: RePEc:eui:euiwps:eco2004/30
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Find related papers by JEL classification: D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior F02 - International Economics - - General - - - International Economic Order; Noneconomic International Organizations;; Economic Integration and Globalization: General H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
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References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Alberto Alesina & Ignazio Angeloni & Ludger Schuknecht, 2002.
"What Does the European Union Do?,"
EUI-RSCAS Working Papers
61, European University Institute (EUI), Robert Schuman Centre of Advanced Studies (RSCAS).
[Downloadable!]
Alberto Alesina & Ignazio Angeloni & Ludger Schuknecht, 2005.
"What does the European Union do?,"
Public Choice,
Springer, vol. 123(3), pages 275-319, June.
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