We model an international union as a group of countries deciding to centralize the provision of public goods, or policies, that generate externalities across union members. The trade-off between the benefits of coordination and the loss of independent policymaking endogenously determines size, composition, and scope of the union. Policy uniformity reduces the size of the union, may block the entry of new members, and induces excessive centralization. We study flexible rules with nonuniform policies that reduce these inefficiencies, focusing particularly on arrangements that are relevant to the ongoing debate on the institutional structure of the European Union.
|Date of creation:||2005|
|Date of revision:|
|Publication status:||Published in American Economic Review|
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- Alberto Alesina & Ignazio Angeloni & Federico Etro, 2001.
"Institutional Rules for Federations,"
NBER Working Papers
8646, National Bureau of Economic Research, Inc.
- Alberto Alesina & Ignazio Angeloni & Federico Etro, 2001. "Institutional Rules for Federations," Harvard Institute of Economic Research Working Papers 1940, Harvard - Institute of Economic Research.
- Alberto Alesina & Romain Wacziarg, 1999.
"Is Europe Going Too Far?,"
NBER Working Papers
6883, National Bureau of Economic Research, Inc.
- Alesina, Alberto & Wacziarg, Romain, 1999. "Is Europe going too far?," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 51(1), pages 1-42, December.
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