NDLI: The law and economics of supranationalism: the European Union and the subsidiarity principle in collective action perspective

Content Provider	Springer Nature Link
Author	Levy, Richard E.
Copyright Year	2015
Abstract	This article, prepared for an issue devoted to the work of Judge Richard A. Posner, considers the implications of law and economics for the structure of supranational organizations, with particular attention to the application of collective action theory to the relationships among states in the EU. After discussing the connections between this approach and Judge Posner’s work, the article describes collective action theory and its implications for our understanding of the state and of relationships among states. From this perspective, supranational organizations such as the EU can be understood as institutional structures that facilitate collective action among states by reducing the transactions and enforcement costs of making and implementing collective decisions. At the same time, the delegation of authority to supranational institutions creates agency costs for states and their peoples because the interests of the state and its people diverge from the interests of the collective in some instances. Viewed in this perspective, the institutional structure of the EU—like that of other supranational organizations or federal nation states—reflects an effort to strike a balance between collective decision making and local control so as to maximize the collective gains and minimize the resulting agency costs. Understood in these terms, various features of the EU’s institutional design make sense. The ordinary legislative process permits the EU to act without the unanimous consent of member states, thus reducing transactions costs in those areas where collective action is necessary, particularly in relation to the creation and regulation of the internal market. The EU reduces enforcement costs through principles of direct applicability or effects and the supremacy of EU law, which are effective legal restraints in states governed by the rule of law. The institutional structure of the EU also incorporates a representative and deliberative process for collective action that helps control the resulting agency costs for member states and their peoples through supermajority and co-decisional requirements. The collective action perspective also illuminates the function of the subsidiarity principle and the enhanced role of national parliaments in its enforcement.
Starting Page	441
Ending Page	473
Page Count	33
File Format	PDF
ISSN	09291261
Journal	European Journal of Law and Economics
Volume Number	43
Issue Number	3
e-ISSN	15729990
Language	English
Publisher	Springer US
Publisher Date	2015-09-04
Publisher Place	New York
Access Restriction	One Nation One Subscription (ONOS)
Subject Keyword	Collective action Supranational organizations Law and Economics European Integration Public Finance Commercial Law
Content Type	Text
Resource Type	Article
Subject	Business and International Management Law Economics and Econometrics

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