Should a subset of member states of a federation be allowed to form a sub-union on some policy issue? When centralization is not politically feasible, allowing an enhanced cooperation agreement among a subset of countries permits the latter to gain benefits which would otherwise be lost....

This paper applies the economic theories of fiscal federalism and jurisdictional competition to the question whether the juridical presumption favoring decentralization of authority manifested in the European Union's subsidiarity principle has been rebutted in the case the Code of Conduct on...