Emanuela Carbonara , Barbara Luppi and Francesco Parisi (University of Bologna – Department of Economics , Università degli studi di Modena e Reggio Emilia – Dipartimento di Economia Politica and University of Minnesota – Law School) have posted Self-Defeating Subsidiarity: An Economic Analysis on SSRN. Here is the abstract:
In this paper we analyze the factors that should be considered when allocating a given policy function at a particular level of government and how these factors affect the growth and evolution of multi-level governments. After discussing the interplay of economies of scale, economies of scope, and heterogeneity of preferences in determining the optimal level of legal intervention, we show that the subsidiarity principle can have mixed effects as a firewall against progressive centralization. Our economic model of subsidiarity reveals that once some functions become centralized, further centralization becomes easier and often unavoidable. Contrary to its intended function, a piecemeal application of the subsidiarity principle can trigger a path-dependent avalanche of centralization, turning subsidiarity into a self-defeating statement of principle.