IDEAS home Printed from
MyIDEAS: Login to save this article or follow this journal

On enhanced cooperation

  • Bordignon, Massimo
  • Brusco, Sandro

Should a subset of member states of a federation be allowed to form a sub-union on some policy issue? When centralization is not politically feasible, allowing an enhanced cooperation agreement among a subset of countries permits the latter to gain benefits which would otherwise be lost. However, if in the future the excluded countries also want to join, the fact that a sub-union has been formed in the past may change the status quo to the advantage of the first comers. We show that as long as countries can commit to harmonize at a policy which also takes into account the utility of the excluded country, sub-union formation may be optimal. The relative advantage of a sub-union towards centralization increases when transfers are costly. On the other hand, if commitment is not possible then excluded countries may be penalized. We use these results to discuss of the newly introduced rules for enhanced cooperation agreements in the European Union, suggesting that they might lead to increased centralization.

(This abstract was borrowed from another version of this item.)

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: Full text for ScienceDirect subscribers only

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by Elsevier in its journal Journal of Public Economics.

Volume (Year): 90 (2006)
Issue (Month): 10-11 (November)
Pages: 2063-2090

in new window

Handle: RePEc:eee:pubeco:v:90:y:2006:i:10-11:p:2063-2090
Contact details of provider: Web page:

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.:

as in new window
  1. Alberto Alesina & Ignazio Angeloni & Federico Etro, 2001. "The Political Economy of International Unions," Harvard Institute of Economic Research Working Papers 1939, Harvard - Institute of Economic Research.
  2. Guido Tabellini, 2003. "Principles of Policymaking in the European Union: an Economic Perspective," Levine's Working Paper Archive 506439000000000157, David K. Levine.
  3. Alberto Alesina & Ignazio Angeloni & Federico Etro, 2001. "Institutional Rules for Federations," Harvard Institute of Economic Research Working Papers 1940, Harvard - Institute of Economic Research.
  4. Alberto Alesina & Ignazio Angeloni & Ludger Schuknecht, 2005. "What does the European Union do?," Public Choice, Springer, vol. 123(3), pages 275-319, June.
  5. Philippe Aghion & Pol Antràs & Elhanan Helpman, 2004. "Negotiating Free Trade," NBER Working Papers 10721, National Bureau of Economic Research, Inc.
  6. Alberto Alesina & Vittorio Grilli, 1993. "On the Feasibility of a One or Multi-Speed European Monetary Union," NBER Working Papers 4350, National Bureau of Economic Research, Inc.
  7. Kevin Roberts, 1999. "Dynamic Voting in Clubs," STICERD - Theoretical Economics Paper Series 367, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
  8. Seidmann, Daniel J & Winter, Eyal, 1998. "A Theory of Gradual Coalition Formation," Review of Economic Studies, Wiley Blackwell, vol. 65(4), pages 793-815, October.
  9. Roberto Perotti, 2001. "Is a Uniform Social Policy Better? Fiscal Federalism and Factor Mobility," American Economic Review, American Economic Association, vol. 91(3), pages 596-610, June.
  10. Levy, Philip I, 1997. "A Political-Economic Analysis of Free-Trade Agreements," American Economic Review, American Economic Association, vol. 87(4), pages 506-19, September.
  11. Robert P. Inman & Daniel L. Rubinfeld, 1998. "Subsidiarity and the European Union," NBER Working Papers 6556, National Bureau of Economic Research, Inc.
  12. Fernandez, Raquel & Rodrik, Dani, 1991. "Resistance to Reform: Status Quo Bias in the Presence of Individual-Specific Uncertainty," American Economic Review, American Economic Association, vol. 81(5), pages 1146-55, December.
  13. Matthias Wrede, 2004. "Small States, Large Unitary States and Federations," Public Choice, Springer, vol. 119(1_2), pages 219-240, 04.
  14. Widgrén, Mika, 2001. "Optimal Majority Rules and Enhanced Cooperation," CEPR Discussion Papers 3042, C.E.P.R. Discussion Papers.
  15. Gérard Roland, 2000. "Transition and Economics: Politics, Markets, and Firms," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262182033, June.
  16. Abdul Ghafar Noury & Simon Hix & Gérard Roland, 2004. "How to choose the European executive? A counterfactual analysis, 1979-2001," ULB Institutional Repository 2013/8496, ULB -- Universite Libre de Bruxelles.
  17. Bard Harstad, 2006. "Flexible Integration," Discussion Papers 1428, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  18. Jürgen Stehn, 2002. "Towards a European Constitution: Fiscal Federalism and the Allocation of Economic Competences," Kiel Working Papers 1125, Kiel Institute for the World Economy.
  19. Mathias Dewatripont & Francesco Giavazzi & Jürgen von Hagen & Ian Harden & Didier Baudewyns & Gérard Roland & Howard Rosenthal & André Sapir & Guido Tabellini, 1995. "Flexible integration: towards a more effective and democratic Europe," ULB Institutional Repository 2013/9541, ULB -- Universite Libre de Bruxelles.
  20. Simon Hix, Abdul Noury, Gérard Roland, 2003. "How to Choose the European Executive: A Counterfactual Analysis (1979-1999)," Les Cahiers européens de Sciences Po 1, Centre d'études européennes (CEE) at Sciences Po, Paris.
  21. Alberto Alesina & Vittorio Grilli, 1993. "On The Feasibility Of A One-Speed Or Multispeed European Monetary Union," Economics and Politics, Wiley Blackwell, vol. 5(2), pages 145-165, 07.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:eee:pubeco:v:90:y:2006:i:10-11:p:2063-2090. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.