The Legal Innovation of the European Grouping of Territorial Cooperation and its Impact on Systems Competition
The European Grouping of Territorial Cooperation (EGTC) is a novel European legal form for cross-border, interregional and transnational cooperation. It was first implemented in 2006. It allows the cooperation of regional authorities, associations or other public bodies to form an own legal entity. To explain the mechanisms behind a legal innovation such as the EGTC, we apply insights from innovation economics, political sciences, and Law and Economics to the generation and diffusion of legal innovations.
The EGTC has been generated by the EU actors in a top-down process of statutory legal innovation. Although it is a rather new legal form, with a database still too narrow to perform quantitative tests, our analysis shows that both internal determinants and regional diffusion models are useful in explaining the adoption of the EGTC. Since the EGTC changes the opportunities for cooperation within systems competition, it may act as a driver of further legal evolution, bringing about bottom-up legal innovation. By applying the four notions of systems competition, we find that the EGTC as a legal innovation may improve both yardstick and locational competition. So far however, there is no clear evidence that it also impacts regulatory competition in its narrow sense or competition among different legal arrangements.