Enforcing competition among governments: Theory and application to the European Union

Horizontal competition among governments has to be enforced by a higher-level institution, but this institution must not be the federal or union government, parliament or court, because these have a vested interest in intergovernmental collusion and ultimately in monopolization. The European Union institutions have been interested in removing national protection, regulations and subsidies because, by doing so, they could induce the interest groups, politicians, and bureaucrats of the member-states to demand more European protectionist measures, regulations, and subsidies. The establishment of a directly elected European Senate is proposed which would have no other powers than to enforce competition among governments on the basis of qualified minority decisions. © 1999 Kluwer Academic Publishers, Boston.