Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/26121
Authors: 
Konstantinidis, Nikitas
Year of Publication: 
2007
Series/Report no.: 
CESifo working paper 2076
Abstract: 
This paper introduces a new theoretical framework of international unions qua coalitions of countries adopting a common policy and common supranational institutions. We introduce a general class of non-cooperative spatial bargaining games of coalition formation among three countries in order to examine the endogenous strategic considerations in the creation and enlargement of international unions. Why would we observe a gradualist approach in the formation of the grand coalition even if the latter is assumed to be weakly efficient? We propose uncertainty about the benefits of integration as a mechanism that can generate gradual union formation in equilibrium. As it turns out, it may well be in the ‘core’ countries’ interest to delay the accession of a third, peripheral country in order to i) stack the institutional make-up of the initial union in their favor and ii) signal their high resolve to wait out the expansion of their bilateral subunion. A related case from the European Union provides an interesting illustration.
JEL: 
F53
C72
D82
Document Type: 
Working Paper

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