"Rules, economics, and strategies: the process of European Financial Market integration"

[From the Introduction]. This paper reviews single market regulation, with particular reference to the financial sector and uses this as a foundation to consider the process whereby a European market is developing. Unlike much previous analysis which has emphasized the role of state interests (neo-realism) (Moravcsik) or the role of the Commission as part of an elite process (Sandholtz and Zysman), this paper argues that the strategic decisions of firms are of primary importance. This area has been relatively neglected. For example, in an otherwise comprehensive paper by Cornett and Caporaso (1992) the issue of strategy and market behaviour is expressly not considered as part of the review of neoclassical economics. It is the general contention of this paper that the analysis of the single market regulatory change, links onward the issue of company behaviour and that the latter is not reducible to dynamic equilibrium analysis. Both of theses issues in turn can be used to enhance our understanding of integration processes in the EC, particularly on the questions of market evolution, design and governance.