Schmidtchen, Dieter; Steunenberg, Bernard --- "European policymaking: An agency-theoretic analysis" [2003] ELECD 71; in Marciano, Alain; Josselin, Jean-Michel (eds), "From Economic to Legal Competition" (Edward Elgar Publishing, 2003)

Book Title: From Economic to Legal Competition

Editor(s): Marciano, Alain; Josselin, Jean-Michel

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781843760061

Section: Chapter 7

Section Title: European policymaking: An agency-theoretic analysis

Author(s): Schmidtchen, Dieter; Steunenberg, Bernard

Number of pages: 22

Extract:

7. European policymaking:
An agency-theoretic analysis
Dieter Schmidtchen and Bernard Steunenberg

INTRODUCTION
In various European legal acts the Council has delegated power to the
Commission to set common policy, conditional on specific procedural require-
ments. Those requirements are commonly known as `comitology'. In this
chapter we analyse whether and how far these implementation procedures help
to overcome a dilemma of delegation,171 which arises if (a) a principal and an
agent have conflicting interests and (b) the principal, due to the structure of the
principal­agent relationship, cannot perfectly control the agent (structure-
induced agent discretion).
As is well known from the principal-agent literature (see Sappington
1991), conflicting interests and information asymmetry allow the agent to
choose actions which are inconsistent with the preferences of the principal.
However, as is often overlooked, conflicting interests and asymmetric infor-
mation are sufficient but not necessary conditions for agent discretion. We
also have room for agent discretion with perfect and complete information, if
the structure of the principal-agent relationship allows the agent to deviate
from policies preferred by the principal. This kind of discretion, that has been
labelled by Steunenberg (1996) structure-induced discretion, can arise, for
example, if the legislature has difficulties in deciding collectively on its
actions (see also Cooter, 2000: 154­61). The legislative process can be
hampered by majority rule cycles, which the agent may employ to its advan-
tage (Hill 1985). Furthermore, new legislation can be blocked if political
actors do not agree on any ...