Evolutionary dynamics in internal market regulation in the European Union

The chapter applies a historical institutionalist perspective to analyse the dynamics of market regulation in the European Union. It shows how an institutionalist perspective allows a deep understanding of the feedback loops that affected the preferences of European stakeholders and transformed initially insignificant agreements into profound changes that became visible only with time. Using the internal market for network industries as an example, it hows how European regulation expanded and was transformed from a very limited and often non-binding set of policies to an integrated and wide-ranging framework that sees rules for liberalisation and re-regulation of competition, together with new EU-level regulators. The long-term perspective of historical institutionalism highlights that this incremental but profound change was possible because critical junctures, in particular judgments by the European Court of justice, allowed the European Commission and its allies to advance new policy proposals with a new default position. This in turn affected the preferences of major member states and created new coalitions. In addition, initial agreements led to the emergence of new actors. Taken together, the feedback loops reinforced the orientation of previous agreements and created changes that most observers would have qualified as impossible three or four decades ago.