Decision rules,membership and political centralization in the European Union

The decision to enter the European Union is based on a comparison of the costs of staying out and going it alone, and the costs membership. The latter depend on the degree of preference heterogeneity between prospective members and the Union as well as the decision rules employed for “constitutional” decisions. The same calculus guides the decision, by member states, to shift policies up to the Union level, only now the decision rules refer to centrally assigned policies. Preference heterogeneity makes more inclusive rules optimal in either case while at the same time reducing the attractiveness of membership or the centralization of policies to the EU level, respectively. The analysis complements and extends both traditional fiscal federalism literature as well as the more recent political economics literature on federalism.

Andreas P. KyriacouEmail: