Flexible Integration? Mandatory and Minimum Participation Rules
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 .
Volume (Year): 108 (2006)
Issue (Month): 4 (December)
|Contact details of provider:|| Web page: http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1467-9442|
|Order Information:||Web: http://www.blackwellpublishing.com/subs.asp?ref=0347-0520|
When requesting a correction, please mention this item's handle: RePEc:bla:scandj:v:108:y:2006:i:4:p:683-702. See general information about how to correct material in RePEc.
If references are entirely missing, you can add them using this form.