Part I of this Essay shows that two central principles of the EC, namely mobility between Member States and decentralization of economic policies (subsidiarity), imply that Member States and other lower-level jurisdictions necessarily are in competition with one another (locational competition). Part II presents an outline of a theory of interjurisdictional competition that suggests, first, that only a competitive system of jurisdictions can be compatible with both decentralization and mobility and, second, that interjurisdictional competition may be a superior way of supplying public goods and services. Part III argues that the institutional structure of the EC has failed to take into account the dimension of locational competition among jurisdictions, thus leading to an often unwanted tendency to centralization. Alternatively, Part III suggests an integrated set of rules for competition that protects both competition among firms and interjurisdictional competition within the Community.
Interjurisdictional Competition Within the European Union,
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