Economics of enhanced cooperation in European defense issues

This paper purposes an economics analysis of enhanced cooperation in providing European defense public goods. Since 1999, ESDP (European Security and Defense Policy) is implemented with the voluntary agreement of EU members. This kind of (international) public good provision involves theoretically a free-riding problem. To reduce the negative effects related to collective action, we develop a game-theoretic framework within which three groups of countries adopt either cooperative or noncooperative strategies. We …nd eight Nash equilibrium that we compare in terms of utility associated to each game to reveal that cooperative strategies are best responses to any strategy of the two other groups.