The Political Economy of Institutional Reform in the European Union : The Introduction and Extension of Codecision

In this paper we present a model of institutional reform in the European Union (EU). We focus on the introduction of the codecision procedure and its extension at the expense of the consultation procedure. In particular we develop a game-theoretical, spatial model of institutional choice and policy-making. First, the member states decide what procedures to apply to the policy issues under the EUâ s authority. Next, they set policies under the procedures they chose. We present a perfect information model and thus do not rely on informational asymmetries to explain the reform. We argue that it is not so surprising that member states decide to give the European Parliament (EP) a meaningful role in the legislative process. The introduction and extension of codecision leads to a transfer of power from the Commission to the EP. As a result, member states that are closer to the EP on a policy issue than to the Commission prefer codecision on that issue rather than consultation. Large member states also prefer codecision, because their vote shares are larger in the EP. Codecision is introduced for a set of issues if all member states gain enough on some issues to compensate for their losses on other issues