What Makes Economic Differentiation Effective? Insights from the EU Energy Sector, Banking Union and Third-Country Access to the Single Market

Abstract : Few studies so far have analysed the effectiveness of differentiation in EU policies. This is surprising given the importance and permanence of many differentiated arrangements, for example in EU economic policy. Insights from three studies on differentiation in the energy sector, the financial sector and third-country access to Single Market highlight the importance of institutional factors. EU economic differentiated arrangements tend to be more effective when: (i) there is a good ‘fit’ between the institutional design and the policy objectives; (ii) there are mechanisms to adapt them over time; and (iii) there are institutional provisions to prevent or mitigate negative side effects for the Union as a whole.