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A Small Country in Europe's Integration. Generalizing the Political Economy of the Danish Case

By Martin Paldam

Abstract

A contract between a small country and a large organization is analyzed using an Edgeworth-Box model. The population of the country is divided into two groups: people and elite. The contract has two explicit parameters: an exchange of sovereignty and a net transfer. A small country is defined as one where people consider the power they gain in the organization to be infinitesimal. The elite recognize that they get a net opwer gain. Further, there are two implicit parameters, the big-country advantage and some rents. It is shown that the lens for the elite is much larger than the lens for the population. In a dynamic integration process the contract will inevitably leave the lens. It is finally discussed if it is likely that the resistance of people will erode over time.International coordination/integration

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