HEC Research Papers Series,
HEC Paris

Abstract: With the EU notoriously struggling to articulate a persuasive narrative, the concept of European Public Goods has recently emerged as reference point for legitimizing centralized EU action. The Draghi report and Letta report both refer to this concept, the contours of which remain vaguely defined. While lawyers have not adopted public goods as a core normative category, this piece examines the legal perspective on European public goods. By applying the criteria of fiscal federalism theory, which includes externalities, economies of scale, and preference homogeneity, the analysis demonstrates that trade-offs occur between these benchmarks depending on the specific public goods in question. The EU institutional and legal framework offers instruments and principles to effectively address this trade-off. This paper considers five levers that allow for the customization of public goods at either EU or Member States level (or both), taking into account the specific characteristics of each. These include the allocation of competences within the margins of the Treaty; the decision-making rules in the Council; the provision of public goods at the level of 'clubs' of member states with similar preferences organized within or outside the Treaty; a variable combination of centralization/decentralization of rulemaking, financing, and delivery of public goods; and compensation or redistributive mechanisms to achieve greater alignment of preferences. One of the principal implications of the legal contribution to the discourse on European public goods is that the question of whether public goods should be provided at the national or European level may be a misguided one. The pertinent question, therefore, is how to establish institutional frameworks for the provision of public goods, with a view to optimising the benefits of such goods for EU members.

Keywords: Public goods; federalism; European Union; Economies of scale; Externality; Preferences

JEL-codes: H41; H77; K33

28 pages, First version: November 10, 2025. Revised: December 10, 2025.

Full text files

papers.cfm?abstract_id=5728042 HTML file Full text

Download statistics

• HEC Paris
• Ordering Working Papers
• Home page for this series

Questions (including download problems) about the papers in this series should be directed to Antoine Haldemann ()
Report other problems with accessing this service to Sune Karlsson ().

RePEc:ebg:heccah:1593This page generated on 2026-03-04 15:39:49.