Common agricultural policy: A game of national interests and economic constraints

The Common Agricultural Policy (CAP) absorbs a major portion of expenditure s from the general budget of the European Union. The distribution of CAP ou tlays among member states clearly depends on economic factors, such as the size and structure of countries' agricultural sectors, as well as an the di stribution of power in the Council of the EU. Assuming that national intere sts are essential, this study models the allocation of CAP expenditures as a game without transferable utility played by member states. This framework enables the incorporation of necessary economic constraints to the game-th eoretic analysis. The fit of the presented model is substantially better th an existing predictions based solely on the distribution of power or solely on macro-economic factors.