Policy learning in embedded negotiations: Explaining EU electricity liberalization

Taking the example of the liberalization of the electricity supply industry, I analyze member-state negotiations in the European Union (EU). Confronting central tenets of the intergovernmental approach, I suggest that member-state executives act within the limits of bounded rationality and do not always hold clear and fixed preferences. I focus on the large member states Germany, France, and the United Kingdom and identify four institutional mechanisms that support outcomes above the least common denominator: (1) the role of norms that constrain strategic action and frame the negotiations, (2) the empowerment of supranational actors, (3) the decision routines of the Council of the European Union that provide standardized mechanisms for resolving conflicts and induce policy learning and preference changes, and (4) the vertical differentiation within the Council system that can unblock issue-specific controversies. Even if as a result of these techniques EU legal acts contain several flexibilization elements, they can trigger behavioral changes that clearly surpass their regulatory content.