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One Market, One Law: EU Enlargement in light of the economic theory of optimal legal areas

  • Schmidtchen, Dieter
  • Neunzig, Alexander R.
  • Schmidt-Trenz, Hans-Jörg
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    Drawing on a new analytical framework provided by the economic theory of optimal legal areas, this paper identifies the factors determining the optimal size of the European Union. It applies this theory to the question of how enlargement affects the welfare of the current and the new members of the European Union as well as that of the non-qualified countries. A welfare analysis reveals that enlargement can be a pareto-superior move. But, it also shows that enlargement can impose a negative externality on those countries left behind. In this case the results of a Kaldor-Hicks test are mixed. Furthermore, it is shown that the enlargement decision of the Union is unlikely to maximize overall welfare.

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    File URL: http://econstor.eu/bitstream/10419/23112/1/2001-03_one.pdf
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    Paper provided by Saarland University, CSLE - Center for the Study of Law and Economics in its series CSLE Discussion Paper Series with number 2001-03.

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    Date of creation: 2001
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    Handle: RePEc:zbw:csledp:200103
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    1. Romer, Paul, 1993. "Idea gaps and object gaps in economic development," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 543-573, December.
    2. Sandler, Todd & Tschirhart, John T, 1980. "The Economic Theory of Clubs: An Evaluative Survey," Journal of Economic Literature, American Economic Association, vol. 18(4), pages 1481-1521, December.
    3. Hans-Werner Sinn, 1999. "EU Enlargement, Migration, and Lessons from German Unification," CESifo Working Paper Series 182, CESifo Group Munich.
    4. Ng, Yew-Kwang, 1974. "The Economic Theory of Clubs: Optimal Tax/Subsidy," Economica, London School of Economics and Political Science, vol. 41(163), pages 308-21, August.
    5. Kronman, Anthony T, 1985. "Contract Law and the State of Nature," Journal of Law, Economics and Organization, Oxford University Press, vol. 1(1), pages 5-32, Spring.
    6. Jorgen Mortensen & Sandor Richter, 2000. "Measurement of Costs and Benefits of Accession to the European Union for Selected Countries in Central and Eastern Europe," wiiw Research Reports 263, The Vienna Institute for International Economic Studies, wiiw.
    7. Oliver E. Williamson, 1967. "Hierarchical Control and Optimum Firm Size," Journal of Political Economy, University of Chicago Press, vol. 75, pages 123.
    8. Bean, Richard, 1973. "War and the Birth of the Nation State," The Journal of Economic History, Cambridge University Press, vol. 33(01), pages 203-221, March.
    9. Richard E. Baldwin & Joseph F. Francois & Richard Portes, 1997. "The costs and benefits of eastern enlargement: the impact on the EU and central Europe," Economic Policy, CEPR;CES;MSH, vol. 12(24), pages 125-176, 04.
    10. Laurence Moss, 1980. "Optimal jurisdictions and the economic theory of the state: Or, anarchy and one-world government are only corner solutions," Public Choice, Springer, vol. 35(1), pages 17-26, January.
    11. Alberto Alesina & Enrico Spolaore, 1995. "On the Number and Size of Nations," NBER Working Papers 5050, National Bureau of Economic Research, Inc.
    12. Allen, Larry & Amacher, Ryan C & Tollison, Robert D, 1974. "The Economic Theory of Clubs: A Geometric Exposition," Public Finance = Finances publiques, , vol. 29(3-4), pages 386-91.
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