Discussion paper

DP3913 International Unions

We model an international union as a group of countries deciding together on the provision of public goods or policies that generate spillovers across members. The trade-off between benefits of coordination and loss of independent policy-making endogenously determines size, composition and scope of the union. Policy uniformity reduces the union?s size, may block enlargement processes and induce excessive centralization. We study flexible rules with non-uniform policies that reduce these inefficiencies focusing on arrangements relevant in the context of existing unions or federal states, like enhanced cooperation, subsidiarity, federal mandates and earmarked grants.


Alesina, A, I Angeloni and F Etro (eds) (2003), “DP3913 International Unions”, CEPR Press Discussion Paper No. 3913. https://cepr.org/publications/dp3913