Third-State Bargaining Calculations and Institutionalization in the European Union.

What accounts for the willingness of major European powers to institutionalize integrationist bargains through delegation and pooling of sovereignty? One explanation may rest upon the Schelling Conjecture, that actors may be able to improve their outcomes in distributive bargaining situations by constraining their own options. This paper analyzes the results of bilateral distributive bargaining between European Union member states and non-European third states before the implementation of various European agreements delegating and pooling sovereignty in the areas of monetary, fiscal, and trade policy. Those results are compared with distributive bargaining results after institutionalization. I characterize the decision to institutionalize as a strategic move in a nested game and use a formal model derived from the Nash Bargaining Solution to demonstrate the gains the European state can hope to capture through self-constraint. ..PAT.-Unpublished Manuscript [ABSTRACT FROM AUTHOR]