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21 Eur. J.L. & Econ. 5 (2006)

handle is hein.journals/eurjlwec21 and id is 1 raw text is: Eur J Law Econ (2006) 21: 5-12 DOI 10.1007/s10657-006-5668-z European integration from the agency theory perspective J. Andr6s Faifia - Antonio Garcia-Lorenzo- Jesds L6pez-Rodriguez © Springer Science + Business Media, Inc. 2006 Abstract European integration is a process in which national governments look for higher levels of integration and promote new requests for allocations from the supranational author- ity while the balance between the benefits and costs of the supranational collective action becomes increasingly favourable. This process may be analyzed as an agency problem where different national governments, acting as principals, try to lead a single agent-the supra- national authority-to make a decision on the level of integration. In this paper, decisions on integration of equilibrium are studied as the result of a non co-operative two-stage game, where national governments outline their political support strategies in the first stage and the supranational authority decides the level of integration in the second stage. Keywords European integration - Agency theory - Benefits and costs of integration JEL Classification D72 1. Introduction The theories traditionally used for explaining the nature of the process of European integration have highlighted several aspects of the process without providing a convincing answer, thus emphasizing the absence of a dominant paradigm. Each of them has tried to justify what has taken place at each historic moment of the process after the event, but none of them has been able to explain the result (see Michelmann and Soldatos, 1994; Pelkmans 2001). As a result of the lack of explanation from these theories and in the face of the recent changes which have taken place in the European Union in favour of a higher level of integration, we consider that new approaches have to be used. J. A. Fafina Jean Monnet Chair in European Industrial Economics, University of A Coruna A. Garcfa-Lorenzo (E) - J. L. Rodrfguez Department of Economic Analysis and Business Administration, University of A Coruna Jesds L6pez-Rodrfguez email: {aglec@udc}{jelopez@udc}.es Springer