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Flexible Integration

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Author Info
Bard Harstad

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Abstract

For a club such as the European Union, an important question is when, and under which conditions, 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 generates a freerider problem if potential members choose to opt out. The analysis shows that flexible cooperation is better if the heterogeneity is large and the externality small. The best possible symmetric and monotonic participation mechanism, however, is implemented by two thresholds: A mandatory and a minimum participation rule. Rigid and flexible cooperation are both special cases of this mechanism. For each of these thresholds, the optimum is characterized.

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Paper provided by Northwestern University, Center for Mathematical Studies in Economics and Management Science in its series Discussion Papers with number 1428.

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Date of creation: Oct 2006
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Handle: RePEc:nwu:cmsems:1428

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  1. Carraro, Carlo & Marchiori, Carmen & Oreffice, Sonia, 2004. "Endogenous Minimum Participation in International Environmental Treaties," CEPR Discussion Papers 4281, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  2. Alberto Alesina & Ignazio Angeloni & Federico Etro, 2005. "International Unions," American Economic Review, American Economic Association, vol. 95(3), pages 602-615, June. [Downloadable!]
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  3. Ulrich Erlenmaier & Hans Gersbach, 2001. "Flexible Majority Rules," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
  4. Jacques Cremer & Thomas R. Palfrey, 2000. "Federal Mandates by Popular Demand," Journal of Political Economy, University of Chicago Press, vol. 108(5), pages 905-927, October. [Downloadable!] (restricted)
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  5. Aghion, Philippe & Antras, Pol & Helpman, Elhanan, 2007. "Negotiating free trade," Journal of International Economics, Elsevier, vol. 73(1), pages 1-30, September. [Downloadable!] (restricted)
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  6. Philippe Aghion & Patrick Bolton, 2003. "Incomplete Social Contracts," Journal of the European Economic Association, MIT Press, vol. 1(1), pages 38-67, 03. [Downloadable!] (restricted)
  7. Bård Harstad, 2007. "Harmonization and Side Payments in Political Cooperation," American Economic Review, American Economic Association, vol. 97(3), pages 871-889, June. [Downloadable!]
  8. Oran R. Young, 2003. "Environment and Statecraft: The Strategy of Environmental Treaty-Making," Global Environmental Politics, MIT Press, vol. 3(1), pages 145-147, 02. [Downloadable!] (restricted)
  9. Burbidge, John B. & James A. DePater & Gordon M. Meyers & Abhijit Sengupta, 1997. "A Coalition-Formation Approach to Equilibrium Federations and Trading Blocs," American Economic Review, American Economic Association, vol. 87(5), pages 940-56, December. [Downloadable!] (restricted)
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  10. Bård Harstad, 2005. "Majority Rules and Incentives," The Quarterly Journal of Economics, MIT Press, vol. 120(4), pages 1535-1568, November. [Downloadable!] (restricted)
  11. Thygesen, Niels, 1997. "Flexible integration and European monetary union," European Economic Review, Elsevier, vol. 41(3-5), pages 451-459, April. [Downloadable!] (restricted)
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