European Overview

The European Grouping of Territorial Cooperation (EGTC) is a new European legal form for cross-border, interregional and transnational cooperation. The EGTC is designed to improve the governance of territorial cooperation by giving the collaboration of subnational public actors a legal personality in its own right. In addition, it is often speculated that territorial cooperation, and especially EGTCs, may support European integration: cooperation among subnational actors would represent “a bottom-up approach to Europe” (Pasi 2007), and the crucial question is, how EGTCs may also contribute to democracy and legitimacy in cross-border cooperation. By taking an interdisciplinary perspective, we scrutinize this question from an economics viewpoint and broaden the scope of economic analysis of CBC and the EGTC, respectively. This is done along a line of argument that is common (or at least familiar) to researchers from both political science and economics: input, output, and throughput. In this paper, we focus on the intermediate level, considering the throughput encapsulated in the legal form of the EGTC. Interestingly enough, this level of analysis has always been prominent in the analysis of the “economic institutions of capitalism” (Williamson 1975), while it has long been neglected in the study of democracy and legitimacy (Schmidt 2010). A truly interdisciplinary analysis that expands the arguments of (new) institutional economics to communicative and deliberative processes is still underdeveloped. Our comparative analysis, first, uses the Law & Economics of private corporate law in order to scrutinize the EGTC as a bundle of specific rights. The analytic unbundling of the different rights contained in the legal form allows a discussion of property rights, decision rights, and information rights, as well as coordination rules. These different kinds of rights specify the EGTC’s organizational costs and the internal transaction costs, respectively. Secondly, broadening the focus of (institutional) economic analysis, we elaborate on the “economics of atmosphere” that is especially promising for taking full account of the provision of common goods in EGTCs.