Law and Economics of the

European Multilingualism

Aurlien Portuese

Electronic copy available at: http://ssrn.com/abstract=1517424

Content

Abstract...p.5 Introduction........p.6 I. Law of Languages in The European Union......p.6 II. Economics of Languages in The European Union............p.7

Part A: Cost-Benefits Analysis of the European Multilingualism......p.8

I. Institutional and Policy Cost.........p.9 a. Linguistic Cost in The EU Institutions......p.9 b. Language Teaching Cost........p.10 II. Production Cost.....p.11 a. Overview of the EU Language Law on Labeling...p.11 b. Economic Analysis of the EU Language Law on Labeling.p.12 c. Cost of the EU Language Law on Labeling.....p.14 III. Competitive Cost...p.14 a. Language Barriers to Entry...p.14 b. Cross-linguistic Market Entry Decision...p.17 . The Linguistic-based Bias.......p.17 . Language Distance as Psychic Distance.....p.17 c. Cost-Benefits Analysis for Cross-linguistic Market Entry Decision In a Nutshell...p.20 IV. Contractual Cost....p.21 a. The Multiplying Effect of Language Barriers on Transaction Costs...p.21 b. Language Barriers as The Major Impediment to EU Cross-border Contracts................p.22 c. An Economic Analysis of Multilingual Contracts..p.22 V. Innovative Cost......p.23 VI. Immobility Cost.p.26 a. Language Barriers to EU Mobility.....p.26 b. Languages in The Workplace.....p.27 c. Discrimination Economics and Language Economics......p.28 d. The Cost of The Non-EU Labour Market..p.28 VII. Criminal Costp.29
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VIII.

Political Cost.p.30

IX. Benefits.....p.31 X. Preliminary Conclusions...p.32

Part B: Linguistic Coase Theorem.p.33

I. From Coase Theorem to Linguistic Coase Theorem.......p.34 a. Overview of The Coase Theorem......p.35 b. Overview of The Political Coase Theorem......p.36 c. Linguistic Coase Theorem......p.36 II. Normativity of The Linguistic Coase Theorem..p.37 III. Predictive Power of the Linguistic Coase Theorem....p.39 a. The Externalities of the Current Multilingualism..p.39 b. Pareto-Optimality Applied to a Lingua Francap.39 c. The Optimal Lingua Franca in The Real World...p.40 d. Literature Concerning The Choice of EU Lingua Franca...p.42 e. The Reciprocal Nature of The Lingua Franca Problem...p.44 . Initial Entitlement of Rights on The UK.....p.45 . Initial Entitlement of Rights on The Continental Europe....p.45

IV. The Challenges of The XXIst Century Europe: Competitiveness And Democracy....p.48

Table of Cases..p.49 Bibliography.....p.50

Electronic copy available at: http://ssrn.com/abstract=1517424

July, The 28th of 2009 Hamburg.

Abstract The economics of language applied to multilingualism in the European Union (EU) has only recently come to the fore. Languages economics and Law and Economics disciplines both emerged in the 1960s. However, no study has, hitherto, linked these disciplines. This paper intends to fill that void. Language barriers are the last major remaining barriers for the EUs 'single' market. The lack of coordination of multilingualism in the EU stems from a taboo crystallized by a dilemma between economic efficiency and linguistic diversity i.e., the maximization of wealth versus the maximization of utility. The EU Member States (MSs) do not hasten to coordinate their language policies at the EU level inasmuch as they overestimate the benefits of the current EU multilingualism while drastically underestimating its costs. Coordination shall will only occur when MSs evaluate the costs and benefits of the current EU multilingualism. This will uncover the aforementioned dilemma, that will only be resolved when both Law and Economics are applied. In pursuing this objective a Linguistic Coase Theorem adapted from the work of Parisi and the Nobel Prize winner, Ronald Coase is elaborated . Having outlined the basic notions deriving from the EU Law of Languages and the Economics of Languages (Introduction), the paper scrutinizes the costs and benefits incurred by the current non-coordinated EU multilingualism (Part I). Subsequently, a 'Linguistic Coase Theorem' is elaborated in order to reach a Pareto-optimal outcome, thereby solving the dilemma both economic efficiency and the linguistic diversity being enhanced (Part II).

Introduction I. Law of Languages in the European Union The EU law of languages is governed unanimously1. The official languages of the EU institutions are the official languages of the MSs, each linguistic version of EU law being "equally authentic"2. Linguistic rights are enshrined for correspondence with the European Institutions and its Bodies3. Cultural/linguistic diversity4 is promoted through the actions of the MSs. In secondary EU law, Article 1 of the Council Regulation 1/58 of 19585 lays down the principle of equal treatment of all official languages of the MS. Correlating the Article 314 in primary law, Regulation 1/58 has established linguistic equality between the official languages of the MS, although "a principle of general linguistic equality is not explicit" (Creech 2005:14). Recently, the Council recognized that the Council is "attached to the fundamental principle of equality of the official languages of the EU as enshrined in the Council Regulation N16. The European Court of Justice (ECJ), ambiguously, expressed its commitment to the linguistic equality principle, when giving approvals to the unequal treatment of some languages8 (Creech 2005:32-38)7. In reality, despite a formal principle of equal treatment, the EU law of languages de facto hierarchizes languages (Creech 2005:44) as follows: 1. English 2. French 3. German 4. Spanish, Italian 5. Bulgarian, Czech, Danish, Dutch, Estonian, Finnish Greek, Hungarian, Latvian, Lithuanian, Polish, Portuguese, Rumanian, Slovak, Slovenian and Swedish 6. Maltese 7. Irish 8. Turkish and Luxemburgish 9. Regional and Minority Languages (RM languages) II. Economics of Languages in the European Union

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Article 217 of the Rome Treaty, Article 290 of the Nice Treaty Article 248 of the Rome Treaty, Article 314 of the Nice Treaty. 3 Article 8d of the Amsterdam Treaty, Article 21 of the Nice Treaty 4 Article 149 of the Nice Treaty 5 Regulation 1/58, O.J. (1958) 017/385. 6 Reply to Written Question E4099/00 (2001) C23E/68 7 Case T-120/99 (2001) "Kik v. OHMI" with a dismissed appeal in the Case C-361/01 P (2003) "Kik v. OHMI"; Case C-42/97 (1999) "Parliament v. Council".
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Through the embodiment of knowledge (Astley and Zammuto 1992:445; Hocevar 1975; Breton 1978), language is the prerequisite medium for the transmission of information. Any language is tied to information, and is priced by the market according to its actual/potential information value determined by the importance of its network of speakers, this determining its usefulness (Grin 2005:61). A language's objective value (price) is manifested by higher earnings for multilingual workers (Vaillancourt 1980; Grenier 1985; Vaillancourt 1991; Ginsburgh and Prieto-Rodriguez 2006). Language is understood as a "hyper-collective" good (De Swaan 1993) being neither a rival nor an excludable good, its value increasing with its use. This flows from the existence of network externalities in languages. An individuals utility is an increasing function of the number of people with whom one can communicate (Church and King 1993:338) creating a positive externality towards a language, and inversely, a negative externality towards other languages, with the extreme consequence of a "linguicide" (Crystal 2000; Phillipson and Skutnabb-Kangas 1995). Languages are capitalized as human capital (Becker 1964; Grin and Vaillancourt 1997) since they encapsulate its three features i.e. "that is productive, costly to produce, and embodied in the person" (Chiswick 2008:4). Language skills reduce transaction costs by reducing informational costs. Although a speaker of a language has communicative interests in having a large linguistic community (Selten and Pool 1991:67), the inclusion of a new member in that community might reduce its human capital by the reduction of comparative advantage in the labour market. Speaking a lingua franca gives less 'monetary benefits' compared to its communicative benefits (Selten and Pool 1991:67) and becomes merely a requirement (Grin 2005:44; Ginsburgh and Prieto-Rodriguez 2006:13). Although not all languages have a market value, every language encapsulates an economic subjective value, since the use of each language delivers to its speakers a utility. The total value of a languages is constituted by "marketable" (objective) and "non marketable" (subjective) values (Grin 2005). Since economics is concerned with the maximization of utility as much as with the maximization of wealth, linguistic diversity and economic efficiency are sought whilst being mutually antagonistic. An optimal level of linguistic diversity has to be reached given its cost (Grin 2005:28; Grin 2002:28). The optimal level of linguistic diversity can encompass full linguistic diversity maximization of utilities if the transaction costs within a multilingual environment are reduced minimization of costs. Therefore, the reduction of transaction costs (costs of language barriers) within the EU multilingual economy is the cornerstone for solving the aforementioned dilemma involving linguistic diversity/economic efficiency. The "language game" theory elaborated by Wittgenstein (1953) emphasizes the utmost importance of reciprocity in the game played. Linguistic conventions must be reciprocally known. The payoffs of players are inter-dependent across linguistic communities while being
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independent within a linguistic community (Selten and Pool 1991:68). The best strategy for a rational player in response to another players move to learn a specific language is to learn this same language, thereby maximizing her communicative benefits (Selten and Pool 1991:67) while minimizing the actual and probable information costs. Finally, a lingua franca emerges. Carr (1985) explains the rise of a lingua franca by comparing common language to a common currency, considering language as an information-carrier. However, the multiple purposes of languages, the language-specific investments, and the subjective value attached to linguistic diversity make the correlation hazardous (Grin 1994:32). Languages have a lock-in effect because language-acquisition requires language-specific investments as an additional knowledge. Because linguistic amnesia is unimaginable, "multilingualism is a viable strategy" (Laitin 1993:235). A rational actor will learn a new language if the expected returns of her current linguistic competence are smaller than the additional net communicative benefits expected from a new language additional communicative benefits minus learning costs (Selten and Pool 1991). The more the linguistic competences are constituted by 'important' languages (e.g. English), the more one is locked into her linguistic repertoire, and the more this equilibrium is stabilised (Gabszewicz et al. 2008:3). In the domain of Behavioural Law and Economics of Language, "stubborn beliefs" about language policies (Pool quoted by Grin,2004:192) and status quo bias regarding language choices are made in the context of bounded rationality (Luo and Shenkar,2006). If there are two-players in a non-coordinated linguistic game, each player being fluent only in the other players language, the equilibrium involves each player speaking her native language in a receptive bilingualism (Pool 1986:165). The outcome is efficient (integral intercommunications) but sub-optimal (Mackaay 2000:7; Pool 1986) with respect to the overinvestment of both players in becoming bilinguals (Church and King 2003:340). Where more than three official languages are involved, with the assumption of each player learning and becoming fluent in one foreign language, non-coordination upon language choices brings about non-integral intercommunication hence inefficiencies. A fortiori in the EU context, with 23 official languages and non-10 coordinated linguistic games between rational players, inefficient outcomes are highly probable without a lingua franca. Part A: Cost-Benefits Analysis of the European Multilingualism Current EU multilingualism has never been subject to an analysis of the costs and benefits incurred in the EU economy. Language-planning can no longer "eschew this core issue" of cost-benefits analysis (Grin 1994:36) if rational decision making is sought. Obviously, the presence of languages in the EU is not a variable, but the (absence of) a EU lingua franca is a variable (a choice).
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I. Institutional and Policy Cost a. Linguistic Cost in The EU institutions The EU started in 1958 with 4 official languages, and nowadays has 23 such languages. The institutional costs of managing the EU multilingualism represents "approximately 1.1 billion per year", tantamount to "2.5 per citizen per year"8. New languages bring small benefits in terms of disafranchisment10. The number of pages translated increased 910 The addition of Irish costs 13,000 per minute of debate in the European Parliament although none of the 6 Irish MEPs debated in Irish9. from 1700 pages in 1958 to 1,700,000 pages in 200710. EU multilingualism represents at least 40% of the EU administrative cost (Haarman 1991:114). If the EU law is inconceivable without translation11 and since translating means choosing (Caill 1967) EU multilingual law is in strictly legal terms [] inconceivable with it (Correia 2003:38). Non-monetary costs delay and error costs have to be taken into consideration, although hard-data can hardly be gathered12. The problem of error cost is double: (i) error cost occurs by the process of translation due to the trade-off between transparency and faithful translation techniques which lead to the probability of errors; (ii)error cost occur due to the use in order to reduce translation costs of intermediary languages. The more 'pivot' languages are used for decreasing translation costs, the more error costs increase. EU multilingual law incurs litigation costs over its interpretation, with a difficult task delegated to the ECJ, which has adopted a supranational interpretative approach13. The ECJ must interpret contradictory linguistic versions, thereby creating citizens and enterprises. b. Language Teaching Cost
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uncertainty costs for EU

Leonard Orban, Commissioner for Multilingualism, Interview of the 12th November 2008 for EurActiv. 9 Source: http://archives.tcm.ie/irishexaminer/2008/01/21/story53174.asp 11
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DG Translations (2008). The hyperinflation in the number of translations creates necessarily problems of uniqueness of meanings (Koutsivitis 1988). 11 Hence the problems of the binding force of non-translated law (Bobek,2007) 12 The delay cost can include the loss of lives. See The Guardian, July the 28th of 2004, Available at : http://www.guardian.co.uk/business/2004/jul/28/politics.europeanunion 13 Case 80/76 (1997) "North Kerry Milk Products Ltd. V. Minister for Agriculture and Fisheries"; Case 30/77 (1977) "Rgina v. Pierre Bouchereau" ; Case 100/84 (1985) "Commission of the European Communities v. United Kingdom of Great Britain and Northern Ireland" ; Case C-449/93 (1995) "Rockfon A/S v. Specialarbejderforbudet" ; Case C-72/95 (1996) "Aannemersbedrijf P.K. Kraaijeveld BV e.a. v. gedeputeerde Staten van Zuid-Holland".
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Overcoming language barriers within the EU 'single' market has led to the3 elaboration of EU programmes14 such as the Lifelong Learning Programme in 200615. Other educational programmes, not especially designed for language purposes, undoubtedly contribute to language learning and teaching such as the Erasmus programme. We found that the average number of hours of foreign language teaching in the EU-27 is about 823 hours per year for primary and secondary educations16. The overall cost of language teaching was roughly 60 billions in 2005 (Lukacs 2007:8). In comparison, the US has no compulsory class for foreign languages. Only 8.6% of the students enrolled have followed foreign language courses (Furman et al. 2007). Not only does the US spends much less public money on language education, but the language education that is given delivers to the US a comparative advantage compared to the EU, since the foreign languages taught open markets located outside the American internal market, whilst language teaching in Europe is necessary in providing access to its own internal market. Regional and Minority (RM) languages have been denied EU legal status. This political/legal choice reinforced the attrition process and endangerment of the more than 600 indigenous and non-indigenous languages spoken in the EU (Broeder et al. 2007:26-27). The EU intends to promote RM languages through public intervention encouraging the supply of goods and infrastructures in these languages, with a questionable low cost-effectiveness a policy-tooutcome path (Grin 2002b:79). Grin and Vaillancourt (1999), although recognizing that private demand is the prima conditio for the revitalization of RM languages, consider State intervention as necessary for reducing the negative network externalities created by the major languages. An alternative approach would be in focusing in enhancing the demand for RM languages a 'market-to-outcome path'. This alternative approach is proposed thanks to the overcoming of the languages network externalities, causing the concentration of language-acquisition on a few 'important' languages. Motivation for a RM language (condition for its survival: Grin 1992) will arise out if the subjective value attached to a specific RM language is taken into consideration. When deciding to learn a language, the traditional trade-off between its communicative benefits the positive network externalities and its subjective value must be halted in order to have an enhanced demand for RM languages: individuals will maximize their utility by freely choosing to learn an ethnic language. The perspective suggested shall avoid inefficiencies (i.e. oversupply)
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Article 126-1 EC Treaty. Decision 1720/2006, November the 15th of 2006. The " Lifelong Learning" Programme's2nde Activity concerns "Languages and Language Learning" and has received in 2008 for two years 9,685,633. Hence, the cost of EU language programmes is approximately 4,842,826 per year. Source: http://eacea.ec.europa.eu/llp/ka2/key_activity_2_en.htm
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European Commission, Eurydice, (2008)Key Data on Teaching Languages at School in Europe, p.93, Available at: http://eacea.ec.europa.eu/ressources/eurydice/pdf/0_integral/095EN.pdf
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since supply shall equate with the enhanced demand for a particular RM language. In conclusion, all these institutional costs are illegitimate since their purporse the equality of languages and the promotion of the European linguistic diversity are de facto either violated (with respect to the illusion of language equality Tosi,2003:129) or merely ineffective (with respect to the promotion of RM languages). II. Production Cost a. Overview of the EU Language Law on Labeling The existence of EU multilingualism impedes the free movement of goods17. The requirement of labeling products in the language of the MS where the product is purchased is an obstacle to intra-EU trade. Goods have to be modified when crossing linguistic borders. However, "the need to modify goods is itself a substantial barrier to market access18. Therefore, language barriers constitutes barriers "having an effect equivalent to quantitative restrictions"19 hence impeding the free movement of goods by fragmenting the EU 'single' market into linguistic markets (in most cases tantamount to the national markets). Nevertheless, this restriction is a lawful barrier, justified by an imperative requirement20: the defense of the consumer demands that a product is labeled in the national language of the MS in order to have full intelligibility of the product by consumers meaning, full information. The complex EU language law on labeling is characterized by the lack of any systematic coherent view21: different directives regulate the labeling of different sorts of products without rational justifications for these distinctions. In the absence of a specific directive, EU language law on labeling does not require the use of a particular language and allows labeling only through "designs, symbols, or pictograms"22(Creech 2005:82). Despite such theoretical possibility, because of the complexity of products and the intelligibility requirement in preparing products for consumer protection purposes, it seems to us that it is only the recourse of a written language (viz. the national language) that renders the protection of the consumers effective. A 'migrant consumer' who purchases a widget tied-in a MS's language without her speaking this language, is obviously not protected inasmuch as the product is labeled in a foreign language she
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Articles 28, 29 and 30 of EC-Treaty. Opinion of Advocate General Jacobs, 44 for C-412/93 (1995) "Leclerc-Siplec". 19 C-8/74 (1974) "Procureur du Roi v. Dassonville" where the ECJ stated that "all trading rules enacted by Member States which are capable of hindering, directly or indirectly, actually or potentially, intra-Community trade are to be considered as measures having an effect equivalent to quantitative restrictions". 20 C-120/78 (1979), "Rewe Zentrale v. Bundesmonopolverwaltung fr Branntwein". 21 Opinion of Advocate General Cosmas 56 for C-385/96, (1998) "Goerres". 22 C-33/97 (1999) "Colim NV v. Bigg's Continent Noord NV".
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does not understand. Consumer protection requirement does not insist on having the product labeled in the mother tongue of the consumer. The free movement of consumers is thereof obstructed. b. Economic Analysis of the EU Language Law on Labeling The legal requirement of different labeling incurs two direct costs for producers: Translation Costs: when the linguistic market targeted is important enough so that the expected benefits outweigh the translation costs, producers shall decide to bear the translation costs. Contrariwise, in the case of a small linguistic market, producers will refrain from translating. A detrimental threshold for intra-EU trade is settled; The opportunity costs of missed scale economies: the unlawfulness to produce and sell a particular product throughout the EU 'single' market all at once disallows economies of scale. The fragmentation of the EU market into linguistic markets concedes a comparative advantage to US producers who enjoy a unilingual continental market. Therefore, after a lowering of their products marginal costs, US producers can subsequently export their widgets abroad in so far as their costs are competitive. Labeling in the national language of the MS where the product is purchased cuts the 'receiving informational costs' for consumers uncertainty and risk costs and/or translation costs while creating 'emitting informational costs' for the producers translation costs. The efficient solution is reached with the aforementioned requirement when the reduction in the producers translation costs is greater than the reduction in consumers costs. Current EU language law on labeling is efficient only when producers constitute the cheapest-cost avoider (Calabresi 1970). Producers can avoid the damage (opportunity costs of non-trade) at the lowest cost by pooling translation costs. Nevertheless, the current legal solution becomes inefficient when either: The damage is reduced/absent. Translation does not enfranchise more consumers. The less the disenfranchisement costs, the less the opportunity costs from missed trade without translation; or, The consumers' costs are reduced. Translation costs can be reduced, for example, by the intervention of the State, whereas the uncertainty and risk costs are reduced when consumers shift from being risk-averse to being riskneutral/favouring. This shift is either the result of the personalities of the consumers, or the result of a pooling of risks. The most probable cause of inefficiency of the current legal situation has to be found whereby there is no consumer disenfranchisement despite the absence of translation. This
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situation is characteristic of multilingual States where consumers are fluent in the other language(s) of the State. In these cases, the translation costs are greater than their expected benefits reduction in consumers' costs because the translation does not bring about a decrease in disenfranchisement costs. Multilingual consumers bear very small uncertainty and risks costs compared to the producers translation costs. In these situations, consumers are the cheapest-cost avoider. As a result, the ECJ rulings "Piageme I"23 and "Piageme II24 on the notion of "language easily understood by the purchaser" derived from Directive 79/112, have to be considered from an efficiency viewpoint. These decisions should not be extrapolated to monolingual MSs26 according to the efficiency rationale explained above. Paradoxically, after having affirmed that "the fact that consumers in a Member State in which the products are marketed are to be informed in the language or languages of that country is therefore an appropriate means of protection", the ECJ judged in the "Crystal Glass" case25 concerning the validity of the Crystal Directive26 that the requirement of labeling only in the language of the country in which goods are marketed is "necessary". Here, the impediment to the free movement of goods is the maximized since bilingual labeling in order to simultaneously sell products in different MSs is prohibited. This judgment appears to overemphasize the need for consumer protection beyond a point where the additional precaution costs more than its inverse additional benefit, and thus leads to an inefficient solution. This wrongly judged decision might be explained on the grounds that the ECJ was protecting a EU law, whereas in other cases national laws were the bone of contention.

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C-369/89 (1991) "Piageme v. BVBA Peeters" : the ECJ judged 16 that "the obligation exclusively to use the language of the linguistic region constitutes a measure having equivalent effect to a quantitative restriction on imports, prohibited by Article 30 of the Treaty". A producer in Belgian is allowed to label its products only in French (or only in Flemish) and sell them throughout Belgium due to the absence of consumers' disenfranchisement. 24 C-85/94, (1995) "VZM v. Peeters NV": the ECJ affirmed that the Directive 79/112, within which the notion of "language easily understood by the purchaser" is promoted, aims to ensure that the consumer is provided with information rather than to impose the use of a specific language. The preoccupation is the information, not the language which is seen as only an information tool. An easily understood language is determined with respect of the similarity of words in different languages, the widespread knowledge amongst the population concerned of more tha n one language, the existence of special circumstances such as a wide -ranging advertising campaign or wide-spread distribution of the product. On this latter criterion, concern can be expressed from the viewpoint of competition policy. Indeed, detrimental effects are created since outsiders without wellknown products have to bear relatively high costs of translation and/or advertising, whereas the insiders can afford to avoid these costs hence strengthening the comparative advantages of insiders. For us, this criterion should not be contemplated by the ECJ. Accordingly, it is necessary to criticise the ECJ ruling C-366/98 "Geoffroy v. Casino France" whereby Coca-Cola (the incumbent) labeling in English (the linguistic hegemon) in France has been authorized not to translate the bottles in French because they are "well-known" products. A contrario, outsiders will have to translate and/or advertise because of their unknown products. 26 Opinion Advocate Generale Cosmas 50 for C- 385/96 (1998) "Goerres". 25 C-51/93 (1994) "Meyhui v. Schott Zwiesel Glaswerke". 26 Directive (1969) 69/493.
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c. Cost of the EU Language Law on Labeling Linguistic markets in the EU are mostly defined by national borders due to the presence of virutaly monolingual States in the EU as a consequence of how the "Spring of Nationalisms" (???) from which the motto "One State One Nation One Language" correlated linguistic boundaries with national boundaries. Hence, since crossing a border inside the EU tends to involve confronting language barriers (because the consumers are not fluent in the original language of the product), producers are the cheapest-cost avoider for cross-border trade, hence incurring the two aforementioned production costs. In the vast majority of cases, "language chaos" remains (Graves 1947). Studies have quantified the costs of language barriers as amounting to 15%-22% in terms of tariff equivalents; the sharing of a common language increases trade from 65% to 170% (Frankel et al. 1995: Frankel 1997; Frankel and Rose 2002; Heliwel 1999). Noguer and Siscart (2003) assessed this cost to be about 6% and the possible increase where a language is shared is of the order of 11%. A recent official report, the ELAN Report (2006:55) found that the optimal level of investments for overcoming language barriers raise the export sale ratio by 44.5% for European SMEs. Had the SMEs engaged in optimal language skill investments, the exports would increase by 10% the EU-GD with a 3.7% increase in Total Factor Productivity. III. Competitive Cost a. Language Barriers to Entry Two similar goods labeled in two different languages cannot be said to be homogeneous. The tie-in of products with their languages leads to different consumer preferences. Demands are not substitutable, ceteris paribus, because of the tie-in of language (communicating valuable information for the consumer) with the product (delivering utility). Entrepreneurs will have to enter into different linguistic markets if they wish to conquer the entire EU market. The relevant market is, ceteris paribus, geographically defined as the linguistic area. With the removal of all barriers inside the EU single market, the remaining differences between MS are mainly national regulations compatible with EU law, taxes, and cultural differences. Differences in laws and taxes are witnessed even in very integrated market such as the US market. The homogenization of cultures across the EU has led to the minimization of cultural differences. The most important feature of cultural differences between Europeans comes down to language differences27.

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Gastronomical tastes differences diverge strongly across the MSs enshrined in consumers' preferences. These differences are obviously part of the cultural differences between Europeans. However, for the purpose of our study, we shall not consider them as we aim at explaining the general
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Empirical researches regarding the organizational culture of firms have established the importance of the language factor in the cultural barriers that firms encounter (Cremer 1993; Schall 1983; Barley 1983; Lazear 1999). Concisely, and by syllogism, we shall say that cultural differences are barriers to entry across MSs (Madsen 1994); language differences are the main feature of cultural differences amongst Europeans; therefore, language differences are entry barriers across MSs. Linguistic costs are the costs of entry in a linguistically different market that fall upon the foreign entrant, but not upon the local incumbent. Language barriers to entry are a specific type of cultural barriers. The social cost of entry barrier is welfare detrimental. Entry barriers have been defined by Stigler (1983) as the "cost of producing (at some or every rate of output) which must be borne by a firm which seeks to enter an industry but is not borne by firms already in the industry" 2830. Language barriers are structural barriers which do not need the actions of the local incumbent in order to deter or postpone the entry. These barriers are faced by potential foreign entrants who do not speak the language of the target market. Inefficient outcomes arise when the least-cost firm is blocked from entering the market. Motta (2004:115) illustrates situations whereby language barriers are discernible, referring to the media market where relevant markets are defined by linguistic boundaries29. The relevant geographic market, independently of the transportation costs, will be the area sharing a common language30. Translation costs and search costs (for interpreters and business contacts) can be assumed to be similar, independently of language. Subsequently, the size and maturity of the market matter. A producer located in a MS will compare the expected payoffs between entry in a MS such as Denmark, and a non-EU market such as Russia. Ceteris paribus, if the payoff in terms of linguistic costs/expected profits is higher for the Russian market than for the Danish market, the producer will enter the Russian market rather than the Danish market. Not only is the EU market fragmented, but also, EU producers neglect one or several markets within the EU when a better payoff is attainable outside the EU. Let us assume two firms a and b incorporated respectively in countries A and B, both countries being monolingual with different languages. Producer a produces its widget written in A's language at the cost of 100 per unit. Producer b produces the 'same' widget but written in B's language, also at the cost of 100 per unit. Both producers' selling prices are 110 per unit.
effect of cultural barriers as non-tariff barriers within the EU market, and not focusing on one particular type of product namely, foodstuffs products. 28 We shall adopt this definition although Stiglers definition differs from the Bains wider definition. See: Bain, J. (1956). Also, Demsetz (1982) and Von Weizsacker (1980). 29 E.g. Decision IV/M.993 (1998) Bertelsmann/Kirch/Premiere where the relevant geographic market was defined as being the German-speaking area; Decision COMP/JV.37 (2000) BSkyB/Kirch PayTV". 30 E.g. Decision COMP/M.2724 (2002) Royal Bank Private Equity/Cinven/Ambion Brick where the relevant market as been defined as the UK and Ireland together.
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Let us assume zero transportation costs and that the only potential competitor for a is b, and vice versa. The translation costs per unit are about 5%, meaning 5 per unit. Is it profitable for a producer to increase its current price in a non-transitory way by 5-10% (SSNIP test)? In order to enter in market B, a will have to face a cost of 105 per unit. Because a has no reputation in B, she cannot increase her price above 110, and will only have 5 profit. Let us assume that the incumbent b reduces its price to 105 before and during the entry. The new price established by b is certainly not a predatory price. If a wants to compete, she will be forced to sell at her marginal cost 105 per unit. Consumers will certainly prefer to buy b's products because consumers will bear uncertainty and risk costs regarding a's products. As long as the entrant does not have a clear competitive advantage compared to the local incumbent so that the inclusion of translation costs into her costs permits her to have her marginal cost lower than the local incumbent's marginal cost, the local incumbent is sheltered from entry. The entrant's marginal cost must be much lower than the incumbent's price in order to compete, which is a welfare detrimental situation. Markets are sheltered from foreign entry because of its "incontestability" (Baumol et al. 1982) which allows the formation of monopolies in the respective linguistic markets. Furthermore, even in the case where the potential entrant can only propose a price equal to the incumbent's price, competition regarding the quality of the product is lost. By the same token, competition over contractual clauses is impeded. Although linguistic costs might impede entry, their effects should not be overestimated. In fact, in most of the cases, the linguistic costs for entry shall not be of sufficient importance to block entry forever. They function as sufficiently high costs to postpone the entry. The more inefficient the incumbent is, the less insurmountable language barriers are31. Language differences are costs to entry, but rarely constitute language barriers since there are many situations where it might be profitable to enter a market despite the linguistic costs (in our example for the 5 expected benefits). How can we explain the fact that language differences functions as entry barriers, whereas in most cases the linguistic costs incurred are not sufficiently high to prevent entry? b. Cross-linguistic Market Entry Decision The answer has to be found in the actors (mis)perceptions of language differences. The fact that actors refrain from entering a linguistically different market, whilst it would be monetarily rational to enter, does not automatically lead to the conclusion that actors act
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Decision IV/M.400 (1994) Allied Lyons/HWE-Pedro Domecq , 33: Member States labeling requirement, for using national language [] does not constitute significant barrier to entry for some alcohols. Here, the relative high prices of alcohol bottles compared to low translation requirements make the language barriers superable.
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irrationally. Without having recourse solely to Behavioural Law and Economics and its concept of a bounded rationality (Jolls et al. 1998), we shall explain the full cost-benefits analysis undertaken by actors when they assess cross-linguistic market entry. The cost-benefits analyses that they make are more complex, involving non monetary concerns. . The Linguistic-based Bias The home-based bias emphasizes that a lack of familiarity, due to cultures and languages, impedes investments. The familiarity-caused home-based bias brings about the aversion to the discomfort created by contacts with the unknown adding non pecuniary dimension to the entry decision (Reinert et al. 2008:604-606). In most cases in the EU, there is a complete correlation between a language and a specific country. Therefore, the linguistic group-based bias determined upon the linguistic community corresponds to the home-based bias determined upon the country (French and Poterba 1991; Coval and Moskowitz 1999; Grinblatt and Keloharju 2001). Consequently, linguistic group-based and home-based biases for our purpose are used indistinctly. Firms have the tendency to evolve in the vicinity of their experiences (Cyert and March 1963) with the linguistic group-based bias playing a fundamental role in this respect. Indeed, "there is a strong tendency for companies to stay within the same language group" (Welch et al. 2001:195). Therefore, the linguistic-based bias leads firms not to envisage entry in cross-linguistic markets. . Language Distance as Psychic Distance When firms envisage entering cross-linguistic markets, the decision-making process encapsulates a "psychic distance" (Beckerman 1956:31-40)32. The notion of psychic distance has become the interests of a wealth of studies regarding international markets (Johanson and Vahlne 1977; Jain 1989; Shoham and Albaum 1995; Hallen and Wiedersheim-Paul 1989). This is due to the fact that "psychic distance intrigues by being a relatively simple, yet outstanding discriminator" (Stttinger and Schlegelmilch 2000:171). Johanson and Vahlne (1977) define psychic distance as factors preventing or disturbing the flows of information between firms and market the language factor quoted as being the first factor. Nordstrm and Vahlne (1992) redefined psychic distance as "factors
32

It is remarkable to notice that Beckmann, in the Ranking of countries in order of estimated

economic distance from selected countries (Table 5) interestingly evidences that the economically closest country for a given country is the country sharing a common language with the country of reference. Either the national language of the country is shared e.g. Germany/Austria; Ireland/UK or one of the languages of the country e.g. Belgium/Netherlands; France/Belgium; Italy/Switzerland or receptive multilingualism is possible e.g. Norway/Sweden; Sweden/Denmark.
17

preventing or disturbing firms learning about and understanding a foreign environment", emphasizing the need of acquiring information about the market and above all understanding them. Understanding is evidently inconceivable if languages differences render the information unintelligible. Barkema et al. (1996) emphasize the role of learning process in the internationalization of the firms. Obviously, the learning process is facilitated (learning costs lubricated) when a common language is shared (Melitz 2007). Psychic distance is an umbrella notion encapsulating different elements, viz. "business practices, institutions, economic environment, industry structure and national culture" (Evans et al. 2002). Due to the European integration, "national culture" as has become the major feature of the psychic distance between MSs. We shall understand "language distance" (West and Graham 2004) to wit, the unintelligibility because of a mere language difference as a sub-category of cultural distance, being itself a category of psychic distance33. Language distance is "bundled into the psychic distance package" (Welch et al. 2001:194). We include the requirement of linguistic competence into what Johnson et al. (2006:536) call the "cognitive cultural intelligence" of the targeted market, which plays "an important role" in the concept of cultural distance. There could be no cultural intelligence of a market without linguistic competence. Intelligence presupposes the mastering of knowledge after a process of learning, a process that postulates a free flow of information. Psychic distance incurs 'psychic costs', consisting in the overestimation of risk costs. An illustration of psychic costs as risk costs exaggerating factor is witnessed with banks offering smaller loans at a higher interest rate to more culturally distant borrowers (Giannetti and Yafeh 2009). Perceivably, costs are dramatically increased altogether with an expected benefits' decrease (Bartlett and Ghoshal 1989; Palich and Gomez-Mejia 1999). Language distance incurs some "liabilities of foreignness" (Zaheer 1995) which are "impediments to effective negotiations and alliance evolution" (Luo and Shenkar 2006:322). Whereas languages are viewed as "keys to market understanding" (Williams and Chaston 2004:477), there is an under-investment in learning foreign languages, leading to an inefficient equilibrium (Konya 2002). Language distance has an influence on both the performance of firms34 and on the equity entry mode choice. There is a conflicting literature in this domain. Researches have found a positive relationship between psychic distance and companies performances the psychic
33

Nordstrm and Vahlne (1992:10) concluded that psychic distance comprises "cultural [...],

structural (such as legal and administrative systems) and language differences" . They classify language distance as a category per se, not as a sub-category of cultural distance as we adopt. This divergence is not significant for our purpose since cultural differences within the EU are limited for market entry decision.
34

Furthermore, language is a key determinant of the performance of a country in general. The more

prominent a country's language is, the greater the country's economic performance (Hall and Jones 1996).
18

distance paradox (O'Grady and Lane 1996; Morosini et al. 1998; Brouthers and Brouthers 2001). Foreseeing greater difficulties, firms make higher investments in learning process, hence reducing uncertainty. Smaller psychic distance does not systematically lead to greater performance (O'Grady and Lane 1996; Luo and Peng 1999). Perceivably small psychic distance leads to overconfidence hence under-investments and under-performance. Other studies found a negative relationship between psychic distance and the performance of firms (Evans and Mavondo 2002; Tihanyi et al. 2005). Another conflicting literature concerns the relationship between cultural distance and entry mode choice. Some authors argue that a high level of cultural distance leads to a jointventure because of uncertainty costs (Kogut and Singh 1988), whilst others argue that cultural distance leads to a sole venture because of risk costs (Anand and Delios 1997; Padmanabhan and Cho 1996; Kogut and Singh 1988; Erramili and Rao 1993; Erramilli 1996; Gatignon and Anderson 1988). Finally, others find no significant relationships between cultural distance and entry mode choices (Gatignon and Anderson 1988; Erramili 1996). Although fascinating, theses two academic debates will not be pursued here as our main concern is the (non-)decision about market entry in cross-linguistic markets, involving neither post-entry performances nor entry-mode choices and the weight that psychic distance might have on them. Nevertheless, from this literature we can state that firms select countries in their internationalization process from culturally close to culturally distant markets (Benito and Gripsrud 1992:464; Nordstm and Vahlne 1992; Johnson and Vahlne 1992). This process of 'cultural selection', applied to the EU context, leads to market fragmentation of the EU 'single' market in relation to 'linguistic selection'. Ceteris paribus, we can deduce that firms select markets within the EU countries as follows (Welch et al. 2001:Figure1): 1) Domestic market 2) Foreign market with language commonality 3) Foreign market allowing receptive multilingualism (e.g. Scandinavia) 4) Foreign market having a foreign language (language distance). Cross-border mergers are more likely to fail when cultural differences with communicational problems (i.e. language barriers) are present (Weber and Camerer 2003; Weber et al. 1996). Pan-European mergers are hinged because of the anticipation of failures caused by communication problems. Salk and Shenkar (2001) show that, in the case of a British-Italian joint-venture with English chosen as the corporation's language, Italians perceive the jointventure as a take-over because of the use of English generally considered as form of "cultural imperialism" (Luo and Shenka 2006:336). The Principal-Agent problem is greatly increased in cross-linguistically market entry. Whilst monitoring costs are increased due to a complexified Principal-Agent problem, this
19

increase might only be contained at a cost of greater uncertainty. In a multilingual organizational management, agents are able to elude monitoring from principals because of undecipherable messages (Shenka and Zeira 1992; Luo and Shenkar 2006). If "leadership becomes in effect a language game (Pondy 1976), leadership with language barriers becomes a 'language non-game' (Triandis 1982; Hofstede 2001; Ronen and Shenkar 1985). The agency theory explains why the lack of language skills block management in these markets (Swift 1991; Turnbull and Welham 1985; Schweiger et al 2003; Manev and Stevenson 2001; Marschan et al. 1997). c. Cost-Benefits Analysis for Cross-Linguistic Market Entry In a Nutshell Language barriers within the EU contribute to increase the market power of firms in their respective linguistic markets and greatly affect the competitive environment in the EU. The EU market fragmentation is due to the fact that firms add the following costs to an ordinary cost-benefits analysis for cross-linguistic market entry: Linguistic Costs : objective costs such as foreign language learning costs, translation costs, increased searching costs; Uncertainty Costs: objective costs increased by the costs of misunderstandings and by the increased monitoring costs because of a Principal-Agent problem; Linguistic Group-based Bias: subjective costs leading not to envisage crosslinguistic market entry; Psychic Costs: subjective costs exaggerating the risks and uncertainty costs. Within the EU, language distance mainly constitutes psychic costs. Hardly a financial assessment on the costs of the EU market fragmentation due to language barriers can be gathered as it presupposes to hypothesize on a unilingual EU. Notwithstanding, some studies managed to distinguish the language factor as impediment in the EU, confirming empirically our above explanations. Head and Mayer (2000) find that language barriers are the most important non-tariff barriers for EU intra-trades "border effects would by 79% lower (1 exp(-1.58)) without trade-impeding effect of linguistic differences". In conclusion, as long as the language barriers will not be reduced or removed, the costs of the EU market fragmentation shall continue to be borne by the EU economy, with the EU 'single' market being a dreamlike ambition. IV. Contractual Cost The existing literature on the economics analysis of contracts makes the assumption of
20

one common knowledge language for the parties and the court (Battigalli and Maggi 2008). In the EU context, language differences raise the problem of translation costs. Translation costs are the informational costs borne by contracting parties for overcoming language barriers. a. The Multiplying Effect of Language Barriers on Transaction Costs The language barriers have the effect of multiplying the transaction costs in each stage of the contractual process. Because information is not lubricated between parties, the burden of language differences will be endured throughout the process, from searching to litigation steps. Mackaay (1982) argues that informational costs can be reduced by a tradeoff consisting of either pooling risks or incurring searching cost up to point where the marginal cost of searching equals the marginal benefit of reduction of risk cost. From Posner s equation (2004), we can say that language barriers have the effect of multiplying the transaction costs. Posner determines transaction costs in a contract as: C = x + p(x) (y + z + e(x,y,z)) Where C stands for transaction costs, x represents the negotiation and drafting costs, y is the parties litigation costs, z stands for judiciary costs, and e represents the error costs. Linguistic costs incurred for a multilingual contract multiply the overall transactional costs (where L is > 0 and represents the multiplicative coefficient of linguistic costs): C = [x + p(x) (y + z + e(x,y,z))] (1 + L) b. Language Barriers as the Major Impediment to EU Cross-border Contracts Cross-border legal uncertainty about European contract laws incurs transaction costs. This leads the literature to promote harmonization of the European contracts laws in order to reduce informational costs. But harmonization of legal systems in Europe is only a tool for lubricating cross-border information (Smith 2005). If divergence of laws creates uncertainty costs (Ribstein 1996), legal uncertainty can only be reduced by the decrease of the informational costs notably incurred by language barriers. The necessary information the foreign contract law is non decipherable due to the unintelligibility (lack of mutual intelligibility??) of the language. Smith (2005) states that uniform contract law has not proved to be an efficient tool for increasing cross-border contracts. The harmonization of contract law as such is not as important for the enhancement of trade as governments or academics sometimes think (Smith 2005). In the absence of a "language game", multilingual contracts are difficult to form.
21

Wittgenstein (1953) explains that there are an infinite numbers of language games played between actors. The promise game constitutes a particular family of language game. A contract game is played, which is an institutionalized reciprocal promising game (analogized from Wittgenstein's example of the marriage contract). No valid promise might be made when contracting parties do not share a common language. Misunderstandings occurring when a common language is learned might have sufficient weight so that risk-averse parties will decide not to enter into this language game, notwithstanding a third language in common with both text and context (Van Dijk 1977) being of importance. Lacking equal proficiency in a common language, inefficiencies due to the "signing-without-understanding" problem arise (variant of the "signing-without-reading" problem, De Geest 2002; De Geest et al. 2002). c. An Economics Analysis of Multilingual Contracts Multilingual contracts are particular sources of incompleteness since the three causes of incompleteness (Tirole 1999) are emphasized in this context. Unforeseen contingencies, writings costs, and enforcing costs are appreciably augmented. Contract incompleteness befalls mainly on the basis of avoidance of the inflation of writing costs (Battigalli and Maggi 2001). Language barriers substantially increase the probability of contract incompleteness, since drafting costs are necessarily higher in multilingual contexts. But because of the reluctance to bear greater drafting costs, parties shall either not enter into a multilingual contract or will accept greater contract incompleteness with "interpretative mistakes" (Eisenberg 2003:1611). As soon as one negotiator is "not truly fluent in a foreign language, [one] should not negotiate in that language" (Craver 2005:440): the additional translation cost is smaller than the additional cost of ex post misunderstandings. Yet, overconfidence and "false consensus" biases (Solan et al. 2007) hamper the recourse of interpreters, and misunderstandings will only be brought into the open at the time of implementing the contract. More frequently opportunistic behaviours will crop up since a party has invested in language learning (or interpreters), whilst the other party did not. Information, as a "capital asset", shares the characteristics of any "investment problem" (Mackaay 1982). Language investments are language-specific investments (if not party-specific), as such being subject to opportunistic behaviours from the other contracting party (all the more if party-specific investments are aimed at understanding only this party). The non-investing party has gained bargaining power with a credible threat to stop the pre-contractual negotiations. In order to have other possible opportunities (risk-pooling), and to avoid sunk costs, only major languages will be learned. The bargaining power of the non-investing party renders an unbalanced contract possible. The more unilateral pre-contractual language investments are made, the more the investing party is subject to an unbalanced contract at her disadvantage. Rational actors will anticipate this damageable
22

outcome by under-investing in language skills, impeding the formation of multilingual contracts. When the supplier has invested in learning the language of potential consumers, the supplier is incentivized to distort information in her favour in the shadow of the consumer protection laws (Mackaay 1982) the high verification costs disincentivize consumers to go through the information supplied. With the assumption of risk-averse parties and aversion to contractual exploitation, consumers are deterred from dealing across linguistic borders. Consequently, language barriers impede cross-border contracts in the EU. Eleven percent of European SMEs lost contracts because of lack of language skills (ELAN Report 2006). A European business is estimated to lose 325,000 in contract value over three years due to lack of language skills. Often, businesses are unaware of contract loss caused by under-investments in language skills. For SMEs and for those aware of contract losses because of language barriers, the cost of lost contracts is estimated for the EU economy to be at least 100 billion per year (ELAN Report 2006). V. Innovative Cost We shall here emphasize the cost of EU multilingualism for patenting in Europe. Language issue is the main obstacle for the emergence of a Community Patent35. Nowadays, patenting in Europe is a jigsaw puzzle36. The European Patent system is the most expensive patent system in the world. Prohibitive patenting costs necessarily bring about a lower demand for patents (De Rassenfosse and Van Pottelsberghe de la Potterie 2008; Mejer and Van Pottelsberghe de la Potterie 2008). Despite the presence of high judiciary and renewable costs, we shall concentrate on the existence of translation costs in the European Patent System. These costs derive from Article 65 of the European Patent Convention (EPC) which has been in force since 1977. Article 65 allows each MS to demand an exhaustive translation of a patent into its own official language(s) by the proprietor. The EPC is a mere bundle of national patent laws within a European institutional umbrella. The entry into force the first of May 2008 of the London Agreement (LA) part of the EPC cut the translation costs since a patent must no longer be translated when written in one of the official languages of the EPC English, French, and German. However, the LA does not answer the aforementioned dilemma involving economic efficiency and linguistic diversity. Indeed, linguistic equality is denied in the LA due to a legalized hierarchization (free-riding) of languages English, French and German being privileged. This linguistic hierarchization may explain the small number of LA ratifications amongst MSs having neither English nor French nor German as their own official language(s).
35

The absence of a Community Patent damage 90% of the European businesses. Source: The European Parliament of Entreprises, http://www.cebre.cz/en/news/new-147/33 36 Commissioner Jan Figel to EUobserver, 18.12.2008: http://euobserver.com/879/27308
23

The breach of the principle of equality of languages might be acceptable if the loss in subjective value were compensated by greater gains in economic efficiency in order to outweigh this breach. Yet, this is unfortunately not the case as we shall briefly explain. For an innovator to patent in all the MS of the EU, the LA only partly reduced translation costs. Indeed, only the filing (Article 1-3 a contrario) of a patent, and only between the contracting parties (only ten EU Member States) was involved (Mejer and Van Pottelsberghe de la Potterie 2008). The geographical limitation of the LA ratifications increases patent validations by 29%, instead of the more than 59% that were LA ratified by all parties at the EPC (Harhoff et al. 2009). To translate a patent into the 23 official languages of the EU cost more than 30,000 (Karoutchi,2001) since on average translating costs 1,700 per language (Van Pottelsberghe de la Potterie and Francois 2006). When the LA regime is applicable, the economic gains are totally insufficient in order for the European Patent System to compete with other world patent systems. Under the LA regime, and only for 13 European countries, a validation of a patent in Europe is still thirteen times more costly than a validation in the US (Mejer and Van Pottelsberghe de la Potterie 2008). If a patent is filed in only 13 European countries, the reduction in translation costs resulting from the ratification of the LA amounts to 4,864 (Mejer and Van Pottelsberghe 2008). Hence, the translation costs alone went from 13,600 to 8,736, whilst the overall cost for filing a US patent and to protect it for 10 years is 12,125 (Van Pottelsberghe de la Potterie and Francois 2006). As shown below, only the translations costs, and only for 13 European MSs, are greater than the entire patenting costs in the US for a ten years protection, not to mention all other patent systems in the world:

24

Source: Mejer and Van Pottelsberghe, 2008: Figure 4. EPO-13 stands for patenting in 13 European countries; LA15 stands for the 15 countries part to the London Agreement; USPTO stands for the US Patent System The efficient solution patenting in only one language throughout the EU would realise significant gain. However, countries would be highly unlikely to relinquish the linguistic rights they currently possess. It is an implausible outcome since it would induce a tremendous loss in the subjective value attached to linguistic equality for all countries other than one highly privileged (free-rider). On the other hand, the economic gains are presumably smaller than the subjective value loss hence the absence of consensus amongst European countries over the LA. The economic efficiency/linguistic diversity dilemma is only too evident. Innovators who wish to protect their inventions in Europe must either bear the patenting costs, among which the translation costs are of significant, or are deterred and choose not to patent at all hence disincentivizing research (Harhoff et al. 2007; Harhoff et al. 2009), or they may resort to patenting abroad hence acerbating the cost of Europe's brain drain in favour of the USA37 (Saint-Paul 2004; Wolff 2004).

VI. Immobility Costs a. Language Barriers to EU Mobility The EU law on the free movement of workers and on European citizenship prohibits any discrimination, de jure or de facto, between national and non-national workers. From ECJ jurisprudence, we understand that employers in multilingual MSs cannot require workers to learn one specific language from among the official languages of the MS, unless justified by necessity and proportionality38. In unilingual MSs, the requirement of the national language for employment appears to be a legitimate discrimination. As the EU is mainly composed by unilingual MSs, employment in another MS leads to the requirement for workers to be fluent in the language of that MS, resulting in a de facto discrimination based on nationality. Although the language requirement is guaranteed as a legitimate discrimination, employers are free not to
37

E.g. Time's article, 01.11.2004: http://www.time.com/time/europe/html/040119/brain/story.html

38

Article 17 to 23 EC Treaty; Articles 39 to 41 EC Treaty; Article 3(1) of the Council Regulation 1612/68; Council Directive 2004/38; C-379/87 (1989) "Groener v. Minister for Education" ; C-274/96 (1998) Bickel and Franz; C-424/97 (2000) Haim II.
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require proficiency in the national language, but instead in a third language (e.g. English). Nevertheless, such a faculty is infrequently exploited (except perhaps for academic positions). The language requirement generates the non-appearance of a EU labour market, but rather, the perpetuating of small national labour markets a EU labour market being absolutely imperceptible (Zimmermann 2009). Language barriers are the foremost hindrance to labour mobility in the EU, since language barriers are perceived as difficult to overcome (Bonin et al.,2008:81) and they are seen as the prime barrier to EU labour mobility (Fertig and Schmidt 2002:Table7). Language barriers astronomically increase migration costs, hence hampering intra-European mobility (European Foundation for the Improvement of Living and Working Conditions 2006). Legal and administrative barriers to intra-EU mobility are very low, an illustration being the important mobility across regions sharing a common language such as Netherlands-Flanders, GermanyAustria, France-Wallonia, Ireland-UK, etc Four percent of EU citizens have lived outside their native MS in another MS (European Foundation for the Improvement of Living and Working Conditions 2006) whereas 32% of US citizens live in a State different from the one in which they were born (US Census Bureau 2000). These 4% have to be compared with the proportion of EU citizens who ever lived in a country outside the EU: 3%. Therefore, the EU political and economic integration (and geographic proximity) only counts for 1% of enhanced mobility. Indubitably, the removal of the legal and administrative barriers to intra-EU mobility does not count for much since this rate is almost equal to the mobility with non-EU countries where legal and administrative barriers are prominent. This confirms what Srivastava and Green (1986:624) state when stating "cultural similarity appears to have a more pronounced effect on relative trade flows than does shared membership in an economic union". Moreover, these 3% have to be compared to the 18% rate of migration across regions within a MS, despite the progresses of the EU law on free movement of workers on equal treatment. Thence, a constant impediment shared by both non-EU countries and other MSs seemingly hinders cross-border mobility but not intra-national mobility. Naturally, language barriers are the distinguishable factor explaining both high intra-national mobility and low crossborder mobility, independently of the country of destination, be it inside or outside the EU. b. Languages in the Workplace Individuals make language-specific investments for expected returns deriving from language skills. With respect to mobility, to become proficient in a foreign language naturally opens up the relevant labour market related to that language. Because learning costs are assumed to be similar, regardless of the language learned, individuals seek accessibility to the most sizeable national labour markets possible, conducing to focus language-acquisition on the
26

'important' languages. Once a language is learned, individuals are locked into the national labour markets corresponding to their linguistic repertoire. A knowledge of foreign languages adds between 5% and 20% to earnings in the EU when the employment is located in the native country of the worker, because this linguistic knowledge constitutes a comparative advantage over other workers (Williams 2005; Ginsburg and Prieto-Rodriguez 2006). With respect to mobility, immigrants proficient in the foreign languages of the host country earn 15% more than non-proficient immigrants (Chiswick and Miller 1995; 2007). However, as complete fluency is rarely attained, difference in proficiency in the national language compared to native speakers leads to lower earnings for immigrants, as traditional economics of language studies have demonstrated (Chiswick and Miller 1995; 1999; 2007; Bleakey and Chin 2004; Leslie and Lindley 2001). The greater the fluency in the national language, the lower the earnings differentials vis a vis native speakers. As a result, individuals are disincentivized to learn a language and to move into the country of that language in order to exploit the benefits derived from their linguistic competences in their home labour market, but also in order to avoid the costs incurred by the lack of fluency in the national language if the migrate, a cost involving lower earnings (full bilingualism being extremely rare). Fluency in the language of the host country is determinant for mobility: whereas one year of education rises the mobility rate by 15% (Machin et al. 2008), foreign language education certainly encourage mobility to that extent.

c. Discrimination Economics and Language Economics We shall try to briefly explain the differential of earnings between proficient immigrants and non-proficient immigrants. We assume that individuals have an aversion to discomfort. Yet, inter-communication problems such as the impossibility of expressing ideas create discomfort for the speakers. Supervisors (Principals) need to have a minimum of inter-communicational problems with their workers (Agents) so that discomfort is avoided, and monitoring costs are minimized. Team performances are positively related to communication (Hoffman 1965; 1979; Rigby 1987; Kirchmeyer and Cohen 1992). A competitive labour market will discriminate those who do not participate in the minimization of communicational costs (Lang 1986). According to the economics of discrimination (Becker 1971; Arrow 1972a; 1972b; 1974), supervisors will require compensation from the workers who are not proficient in the corporate language since they cause discomfort, and inflate monitoring costs. The earnings differential allows the employment contract between the non-proficient immigrant and the supervisor to remain balanced. Accordingly, the 15% cut in earnings correspond to the bearing of both greater
27

discomfort, and greater monitoring costs. Because the language proficiency of an immigrant cannot be as good as that of a native-speaker, migrant workers will anticipate the wages-cut by not crossing borders should the probability of being excluding from a job be sufficiently high, or should the wage reduction fail to amount to the additional benefits expected. d. The Cost of The Non-EU Labour Market The continuation of the national labour markets instead of a continental European labour market hinges on enhancing 'flexicurity' or welfare beneficial39. The cost of employment flexibility might be accepted by workers if the job-finding rates are increased as 'compensation'. A continental labour market would deliver greater employment opportunities for EU workers who would enjoy a greater substitutability of the labour demand conducive to lower employment protection and greater wages, with competition focused on earnings. Language barriers in the EU legitimate the labour rigidities that are responsible for high EU unemployment (Siebert 1997). The mismatch of labour supply and demand due to low geographic substitutability of labour demands obliges the EU economy to bear the high "cost of unemployment" (Pal and Sattinger 2006; Gordon 1973). Provided that the EU "had an employment rate similar to the one prevailing in the United States and in Japan, namely, around 74 percent, instead of the now prevailing level of about 64 percent, per capita gross domestic product (GDP) would be 15 percent higher than it is now, leaving ample room for a more than full solution to problems such as budget deficits or the sustainability of present pension schemes" (Corsi and Roncaglia 2002). Language barriers are without doubt contributing to a great extent to labour rigidities, obliging the EU economy to bear such high cost of unemployment. VII. Criminal Cost Whilst a EU with no more internal borders has been materialised by means of the freedom of movement, police forces remain remarkably national. This allows criminals to mitigate (or to avoid) prosecution. The swiftness at which criminals cross the borders nowadays is much greater than the rate at which information is transmitted between national police forces. Legal and administrative barriers are not the sole difficulty for cooperation between national police forces' since Interpol receives ten times more messages from European national polices forces than does the more integrated Europol (Block,2005) this revealing the persistence of language barriers, notwithstanding the translation system elaborated by Europol.
39

COM(2007)359, European Commission, Towards Common Principles of Flexicurity: More and better jobs through flexibility and security, June the 27th 2007; 16201/07, SOC 523 ECOFIN 503, European Council, Common Principles on Flexicurity; COM(2006) 708, European Commission, Green Paper on the Modernization of Labour Law
28

Indeed, problems of police force cooperation in Europe are not "purely legal" but are also caused by "attitudes and languages"(Levi 1993:175). When automatic translation systems are used to overcome language barriers the, messages must be elementary and "formatted" (Johnson 2003:104). Ingleton (1994) argues that language barriers per se impede the effectiveness of national police force cooperation. The marginal increase in the probability of detection deters crime to a greater extent than an equivalent marginal increase in penalties (Davis 1988). Although acknowledging the "crucial" indispensability of exchanges of information between national police forces for apprehending cross-border criminals, the flow of cross-border information is vividly obstructed due to the "lack of common language" between national police forces (Archick 2002). Language barriers make it extremely complicated for police forces to distinguish between relevant and irrelevant information when prosecuting Euro-crimes, adding to informational costs. Even though once the relevant information is identified, translation is required in order to stamp out any uncertainty. These steps, are not only costly, but are also time-consuming a delay within which criminals cross the borders. Knowing that language barriers lead to low/late probability of detection (Bebchuk and Shavell 1993), and hence to a weaker enforcement of the law for transnational crimes, criminals are under-deterred from perpetrating those crimes (Polinsky and Shavell 1999). The cost of transnational crimes for the EU is constituted by both the occurrence and the non-punishment of these crimes, with language barriers playing a central role in the under-deterrence of these crimes. The cost of transnational crimes in the EU caused by language barriers is hardly measurable. Anderson (1999) estimates the cost of crime in the US to be tantamount to 13% of the GDP for 1997. Lower bound estimates result in evaluating the cost of crime in England and Wales for 2000 as equivalent to 7% of the GDP (Brand and Price 2000) and 3% of the GDP for 1996 in France (Palle and Godefroy 1998). Entorf and Spengler (2002:91) argue that the estimates made by Anderson encapsulate more comprehensive elements naming, tangible and intangible costs and therefore are "probably accurate". Assuming that violence in the US is on average higher than in the EU, the weigh of transnational crimes in the EU that occurred because of the incentive to exploit the language barriers, or which have been unpunished because of language barriers, is obviously hard to measure. Nevertheless, we can affirm that the cost of Euro-crimes caused or unpunished due to language barriers certainly represent some percentage of the EU GDP. VIII. Political Cost Institutional settings are patently not the exclusive reason triggering the so-called EU
29

'democratic deficit'. Practical obstacles occlude the emergence of a pan-EU democratic society. As regards these practical obstacles, EU multilingualism is comprehensibly of major importance in the obstruction of the rise of a supranational democracy. Language is tied into political life because it naturally constitutes its medium (Longman 2007:89; Karisson 1999). The democratic deficit is caused by an absence of European ffentlichkeit (public sphere, Habermas 1989; 1990; 1992a; 1992b; 1992c), which posits a community of communication" embedded with a common language (Risse 2003; Kielmansegg 1996). Wright (2000) argues that democracy is inextricably bound with language, and one wonders how it can be managed without a community of communication. Democracy presupposes participation assuming interpersonal communication, which implies exchanges of information postulating a common medium a common language being at the cornerstone of this socio-political chain. The society may well be multilingual; political debates can only be unilingual. The tie of language is perhaps the strongest and most durable that can unite mankind (Tocqueville 1961:23). With 66% of the EU citizens being monolingual (Karisson 1999), the absence of a common language impedes the emergence of "postnational" Europeans (Habermas 2001). Linguistic diversity clearly prevents the rise of a European 'nation' (Braga and Monti 1982). The origin of this impediment is a demos deficit (Kraus 2008:21), and the impossibility of multilingual campaigning in order to avoid the "multilingual election problem" (Pool 1992). There is what we call a 'receptive democratic deficit' EU leaders cannot receive messages from EU citizens, and an 'explicative democratic deficit' EU leaders cannot explain their policies to EU citizens without either incurring prohibitive monetary and delay costs if discourses are translated into all official languages, or contribute to the linguistic imperialism when EU leaders use English as a lingua franca (Phillipson,1992) thereby contributing to a language disenfranchisement of at least 45% of EU citizens (Ginsburg and Weber,2005;Ginsburg et al.,2006;Fidrmuc et al.,2007). Dismissals of EU texts because of the lacking of a EU political arena incur two costs. First, delay costs are incurred: the EU integration is postponed, whereas the economic and political integration is supposedly welfare beneficial. Second, transaction costs are increased since the rejections of texts lead to renegotiations costs for ersatz of the defeated Treaties. The EU is more than a convivial order, but is neither a (linguistic) community order, nor (yet) a social order (Van Dun 2004). The Babelian EU is a multilingual political order within which political debates by the population are impractical. The notable void (De Swaan,2004) of dialogue/democracy/debate as the reason for the rejection of EU texts was evident in the European Constitution referenda when the Plan-D: Democracy, Dialogue and Debate40, costing 9

40

COM(2005) 494 The Commissions Contribution to the Period of Reflection : Plan-D for Democracy, Dialogue and Debate, 13.10.2005; COM(2008) 158/4 Debate Europe Building on Experience of Plan D for Democracy, Dialogue and Debate, 12.03.2008.
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millions41 for Doing Nothing (Chalmers et al.,2008) was launched. IX. Benefits The benefits here are understood as the benefits of having a multiplicity of languages within the EU. For the sake of brevity, we shall not elaborate on socio-linguistics and the philosophy of language, disciplines which might provide an answer to the present dilemma. We will overview what a language represents for its speakers. We adopt an approach borrowed from the linguistic relativism perspective: the invaluable richness of a language contains its limits within itself the limits of my language mean the limits of my world (Wittgenstein 1921:149). Each language creates its own world independently of the size of the languages network. The existence of a language determines the identity of its speakers: languages predetermine human cognition according to the so-called Whorf-Sapir Hypothesis (Whorf 1956; Sapir 1921; Von Humboldt 1988; Bowerman 1996; Dirven and Niemeier 2000). Linguistic diversity delivers cognitive benefits due to the intrinsic value of language-acquisition. The worldview tied to language constitutes intrinsically ones beingness. Language is "tied to the individual self" (Bretton 1976). The "heart" of a language (Ochs and Schieffelin 1989) delivers a feeling of togetherness amongst members of the linguistic community. The smaller the linguistic community, the stronger this feeling is experienced. Members of the linguistic communitys are empowered to transmit the language naming, its worldview and identity. The "affective dimensions" of each language (Besnier 1990:420) can be translated in economic parlance as utility. The EU linguistic diversity allows for the transmission of cultural heritages, together with an invaluable fragmentization of togetherness into linguistic communities membership. This is even more discernible in the case of RM languages where ethnic identities are embedded into languages (Pendakur and Pendakur 2002:151). The triad language-identity-worldview is enhanced when ethnicity and linguistic communities coincide. 63% of the citizens of the EU-25 would like to see greater support for RM languages (Eurobarometer 2006). Notwithstanding the immense benefits linguistic diversity might provide thanks to the utility derived from a thorough linguistic diversity, these benefits are unexploited, many languages are currently abandoned, smaller languages are lesser used and/or under endangered by linguicide. The benefits of having a EU linguistic diversity are countless, although not effectively exploited. X. Preliminary Conclusions

41

SEC(2006) 1553, Wallstrom M., Plan D : Wider and Deeper Debate on Europe, 24.11.2006.
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A financial assessment of the costs incurred by the language barriers is manifestly a very complicated task. The cost-benefits analysis revealed the extent to which language barriers handicap the EU economy. Language barriers due to the current EU multilingualism are at least equivalent to regulatory barriers or custom barriers (Finkenstaedt and Schrder 1990). The 'Cecchini Report' (1988)42 commissioned by the European Commission43, has estimated that the completion of the EU single market with the removal of "many barriers" by 1992 would lead to an increase of GDP ranging from 4% to 7% of the then European Community the "costs of non-Europe"44. The achievement in 1992 of the EU 'single' market through the removal of legal and administrative barriers did not deliver the expected benefits as stated in the 'Cecchini Report'. The completion of the EU 'single' market only increased the EU GDP by 1.8% per year45. The fact that the real benefits derived from the realization of the EU 'single' market has been dramatically lower than the expected benefits signifies that a consequential impediment to the enjoyment of these benefits was present at that time and has still remained in place. Naturally, the unchanged impediment is the language barriers. Non-tariff barriers other than language barriers (such as legal and administrative barriers) do not contribute to the border effect as much as the European Commission in the Cecchini Report estimated. After the 'realization' of the EU single market in 1992, language differences have been an important element of the border effect (despite the rise of English as lingua franca). Indeed, Head and Mayer (2000:27) argue that without language barriers the EU would be "more integrated than North America". In a unique study of this sort, the overcoming of some language barriers thanks to the language skills of the Swiss people has been estimated to increase by 10% the GDP of the Swiss economy (Grin et al. 2009). This increase is mainly due to the access to only three linguistic markets, viz. the German, the French and Italian linguistic markets. Although an extrapolation to the EU economy is difficult, we can say that if the EU could overcome every language barrier within its own internal market (hence having access to all EU linguistic markets), the GDP of the EU economy would increase at most by 10%, and at least by 4%. Therefore, we shall take the average (7%) as a very probable measure of GDP increase if language barriers did not exist within the EU internal market. With a prudent assessment of the cost of language barriers (7%),

42 43

SEC 88/524 (1988) "Europe 1992 The Overall Challenge". COM 85/310 (1985) "White Paper from the Commission to the European Council Completing the Internal Market". 44 Also, Emerson et al. 1988; Baldwin 1989. 45 SEC 96/2378 (1996), European Commission, "The 1996 Single Market Review"; European Commission, (2002), Working Document "The Internal Market 10 Years Without Internal Frontiers", Available at: http://ec.europa.eu/internal_market/10years/docs/workingdoc/workingdoc_fr.pdf , where we can see that each household gained only 570 per year for the first 10 years of the Single Market (5,700/10), a gain well below the expectations the realization of the Single Market had given.
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these barriers cost roughly 810 billions per year for the EU economy46. The benefits of linguistic diversity are invaluable since the values attached to linguistic diversity in general, and to one's own language in particular, are idiosyncratic values. We can presumably say that the benefits are worth as much as the costs. This assumption explains the taboo surrounding the non-choice between economic efficiency and linguistic diversity. The costs are too burdensome for the EU economy to disregard them, but the marginal economic gain is equal (or even smaller) to the marginal loss in utility derived from linguistic diversity (and vice versa) hence the unresolved dilemma. In the following part we will elaborate on a solution which attains optimality and aims to resolve this dilemma. Part B: Linguistic Coase Theorem The methodology used for the Linguistic Coase Theorem presented below is based on a double analogy. The Linguistic Coase Theorem draws upon the conclusions of the article of Professor Parisi "The Political Coase Theorem" (Parisi 2003). The Political Coase Theorem is itself analogized from the Coase Theorem coined after the article "The Problem of Social Cost" of Nobel Prize Winner Ronald Coase (Coase 1960). The (absence of a) EU language policy results in an uncoordinated multilingualism that is unquestionably non-optimal since the costs (language barriers) are maximized whilst the benefits (linguistic diversity) are minimized. The outcome cannot be optimal due to the lack of coordination. The model "1+2" one mother tongue plus two foreign languages learned can "be trusted" (Grin 2006) only if coordination take place, such coordination being rendered attainable under the Linguistic Coase Theorem. MSs are entitled linguistic rights in the EU so that each MS is incentivized to promote its language at the EU level as a response to similar moves from other MSs. The game played is a 'tit-for-tat' strategy (Axelrod 1984), with the recognition of the official language(s) of a MS by other MSs (and the subsequent non-recognition of non-official language(s) of that State) inducing this MS to reciprocate regarding other MSs' official languages, i.e. recognizing the other MSs' official languages as official languages of the EU institutions (thereof not recognizing other MSs' non-official languages)47. This explains why the number of official languages of the EU institutions passed from four in 1957 to twenty-three in 2007: the new entrants had to recognize that the official languages entitled linguistic rights in order to receive similar linguistic rights. Linguistic rights are naturally enforceable by the ECJ since they are enshrined in EU law.
46

The EU GDP for 2006 amounts 11,583,403 millions (Eurostat 2008 ). Therefore, 7% of the EU 2006 GDP equals 810,838 millions; these costs represent more than eight times the EU budget (100 billions). 47 The only MS who did not use its linguistic right is the Luxemburg for Luxemburgish. However, the situation of the Luxemburg is very particular as French and German are the two other official languages of Luxembourg, and as Luxemburgish is spoken by very small number of people who above all are fluent in both French and German.
33

If a cooperative game is played amongst MSs by reference to their EU linguistic rights, there is no coordination game. A coordination game applied to the EU language policy would mean that MSs choose a common standard for our purpose a common language in order to maximize MSs' payoffs. Integral inter-communications with 23 official languages require coordination involving one common language. I. From Coase Theorem to Linguistic Coase Theorem Coordination cannot take place since linguistic rights are granted to MSs without a possible bargain between them. Linguistic rights are governed unanimously according to Article 290 of the EC Treaty. A consensus over EU language policy has to be reached. A question about why we need a Linguistic Coase Theorem? We necessitate a Linguistic Coase Theorem inasmuch as Article 290 of the EC Treaty requires unanimity in order to change the EU language law. The current law must be reformed since it is economically inefficient and linguistically damaging. In order to have unanimity, all MSs have to be better off following the agreement, without any MS being worse off. Hence, Pareto-optimality is required. The Coase Theorem and the Political Coase Theorem leads to optimality. Therefore, in order to exchange the EU law of languages for an optimal one, we need to apply the Coase Theorem to languages. Consequently, the Linguistic Coase Theorem is not only justified on economic grounds, but is also required from a legal viewpoint. We shall now review the precedents of the Linguistic Coase Theorem, that is the Coase Theorem and the Political Coase Theorem. a. Overview of the Coase Theorem The seminal article of Ronald Coase (1960) revolutionized the way we consider externalities. The Coase Theorem has been summarized in a clear and simple way as: "When transaction costs are zero, an efficient use of resources results from private bargaining, regardless of the legal assignment of property rights"48. In the absence of transaction costs, actors involved in an externality will bargain over their rights, and will attain an efficient allocation of resources, independently of their initial entitlement of rights. As a consequence, bargaining has to be lubricated through the reduction of transaction costs. Therefore, the normativity of the Coase Theorem is:

48

Restatement made by Cooter and Ulen (2007).

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"Structure the law so as to minimize the harm caused by failures in private agreements"49 The reciprocal nature of externalities emphasized by Coase is the major contribution of his article, thereof attacking the "Pigouvian tradition" (Coase, 1960) which taxes a party designated as responsible for the damage. The externality created is fundamentally reciprocal because there is a competition by both parties over a scarce resource (be it space, time, knowledge, etc). "The real question that has to be decided is: should A be allowed to harm B or should B be allowed to harm A?" (Coase 1960). A pollutee creates an externality toward a polluter by impeding the latter from producing as much as she wishes. The pollutee should compensate the polluter by side-payments equating to the polluter's avoidance costs. "Coase was essentially arguing that all Pareto-relevant externalities would tend to be eliminated in the process of free exchange-contract among affected parties" (Buchanan 1984). One assumption we ought to emphasize here concerning the Coase Theorem is the requirement of full information regarding the extent of the externalities created, and the costs for the relevant parties to reduce them (Farell,1987)50. b. Overview of the Political Coase Theorem The Political Coase Theorem of Professor Parisi (2003) applies the rationale of the Coase Theorem to the political market. It can be summarized as follows: When transaction costs are zero and initial entitlements of rights are established, if voters are allowed to bargain under a majoritarian voting rule over the policy outcome and if political bargains are enforceable, no matter the initial political coalitions the outcome will be Pareto-optimal and characterized by: Efficiency Uniqueness Stability. Whatever the original political coalitions, side-payments will occur in different directions but will lead to the same equilibrium. With single-peaked voters' preferences, the Political Coase Theorem leads to a transitive outcome. c. Linguistic Coase Theorem We shall here explain our framework with a methodology similar to the one used by
49 50

Idem. Empirical researches have shown importance of the assumption of full information for having efficient bargains (Hoffman and Spitzer 1982; Hoffman and Spitzer 1986).
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Coase, i.e. using logical insights rather than "blackboard economics". The MSs of the EU are the parties involved in a damage consisting of not having a EU lingua franca, estimated to cost the EU economy approximately 810 billions per year. MSs have to choose a lingua franca: they must give up their linguistic rights at the EU level whilst the constitutional linguistic rights they detain at national levels are preserved. The Linguistic Coase Theorem supposes Coasian bargaining over a language policy outcome where policy-makers (MSs) are both the addressees and the implementers of the policy. With this respect, the Linguistic Coase Theorem resembles the traditional Coase Theorem where parties are both decision-makers and implementers. The bargains within the Political Coase Theorem are based on single-peaked voters' indifference curves overlapping each other, allowing an intermediary equilibrium. On the other hand, MS indifference curves re languages do not overlap. Indeed, each MS is assumed to have very low/no indifference curve outside its own language. This realistic assumption is grounded on the belief that each MS wishes, explicitly or implicitly, to see its own language adopted as the EU lingua franca51. Consequently, a choice is necessary hence full information about the possible alternatives are of paramount importance. Our framework diverges from the Political Coase Theorem in that it takes place at the supranational level rather than within the internal sphere. In addition, the voting rule can only be a unanimity rule (owing to Article 290 EC Treaty) rather than a majoritarian rule. The purpose of the Linguistic Coase Theorem lies not in electing representatives via a market for votes, but rather in determining a EU language policy, and more precisely to coordinate the answers concerning a EU lingua franca. The choice of a language as a EU lingua franca necessarily creates an externality. The country from which the language has been chosen free-rides, deriving a positive externality from all other MSs. Correlatively, all the other MSs suffer a negative externality from the choice made. According to the Pigouvian tradition, the solution is to determine who is the 'generator' of the damage, who is the 'victim' of that damage, and thus to, consequently, tax the 'generator' so that private costs equal social costs (Pigou 1932: Part II). The tax is believed to repair the externalities by forcing the 'generator' to internalize them. We shall formulate our main proposition as follows: When transaction costs are zero, when the initial entitlement of rights is established, if MSs can bargain with a unanimity rule over the linguistic outcome, and if political bargains are enforceable, no matter the initial entitlement of rights, the outcome shall be Pareto-optimal and characterized by: Efficiency

51

The quest for having its own language as an important EU language incurs the costs of rent-seeking, with each MS seeking rents granted to one's language by the EU institutions. For instance, France spent 1,890,000 in 2003 in order to promote the use of French in the EU institutions (Herbillon,2003)
36

Uniqueness Stability. II. Normativity of the Linguistic Coase Theorem Since a Pareto-optimal outcome is reached through Coasian bargaining, bargain should be lubricated. We shall comprehend the zero transaction costs assumption broadly i.e. no legal obstacle, zero monetary transaction costs, zero informational costs, no strategic behaviours. Concerning the Linguistic Coase Theorem, the transaction costs in the real-world can be encapsulated with the below factors: Legal obstacle: Regulation 1/58 of 1958 states that "the official languages and the working languages of the institutions of the Community shall be [the official languages of the Member States]" (Article 1). An implicit principle of linguistic equality is enshrined in EU law without modification since the first day of creation of the EC; Monetary transaction costs: Thanks to the institutional structure of the EU, the costs of transacting are reduced in the same manner the organizational structure of firms reduces transaction costs. Despite high costs for transacting in absolute terms, the monetary transaction costs for bargain over a language policy are relatively very low when they are contrasted with the EU economy indeed, what is the incremental cost of a EU leaders meeting in Brussels? The monetary transaction costs, although positive can be said to be relatively low enough not to impede Coasian bargaining; Informational costs: A contribution of this paper is to have carried out a costsbenefits analysis of the EU multilingualism. We have established that the current legal situation costs at the very least 810 billions per year to the EU economy, with a subjective value attached to linguistic diversity presumably at least equal to these costs. As a consequence, the imperativity about a change of the ongoing situation is blatant. We still have to obtain information about the externalities created, information we shall address in the following section; No strategic behaviour: The absence of strategic behaviour is the strongest assumption made. We shall accept this assumption which can nevertheless be mitigated in its apparent strength. The European construction has led the MSs
37

to be closer to each other than in any other moment in History or in any other region of the world. The MSs play numerous games whereby retaliation, esteem costs and the institutionalization of sanctions reduces the probability of strategic behaviour between MSs. Having low monetary transaction costs, low informational costs, and assuming no strategic behaviour, the Linguistic Coase Theorem seems to take place in a real-world characterized by low/zero transaction except in one respect. In fact, the legal obstacle created by the Regulation 1/58 inflates transaction costs considerably. This Regulation crystallizes national linguistic rights at the EU level, blocking any bargain over the emergence of a EU language policy with a EU lingua franca. Coasian bargain ought to be lubricated, yet are here unlawful. As a consequence, we shall recommend the abolition of Regulation 1/58. Because they have information about the necessity to have a lingua franca in the multilingual EU, and they have information about the colossal costs incurred by language barriers, MSs shall as rational actors enter into Coasian bargaining and end up with an optimal outcome. The normative conclusion of the Linguistic Coase Theorem the abolition of Regulation 1/58 obviously presupposes an initial entitlement of rights which is (i) the constitutional enforcement of linguistic rights at national levels, (ii) the unanimity requirement associated with the 'one State one vote' rule at the EU level. One should not misunderstand this: the prime recommendation of this contribution is the normative conclusion stating the irrelevance of Regulation 1/58 which blocks MSs from bargaining. Given the limited information available the following sections will only predict a tentative outcome from the Linguistic Coase Theorem. 55 III. The Predictive Power of the Linguistic Coase Theorem a. The Externalities of The Current Multilingualism While a linguistic equality principle is enshrined in EU law, it will be of no surprise to anyone to know that English has de facto become the EU lingua franca. This situation results from the fact that Europeans, individuals and firms, need to communicate and English has turned to be their "maximin" the language whereby the minimal level of proficiency is maximal so that the communicational minima is maximized (Van Parijs,2003). In economic parlance, we shall say that a negative externality is created towards nonEnglish speaking countries of the EU for the imposition of what Phillipson calls the "linguistic imperialism" (Phillipson 1992).
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Professor Grin has established that the use of English as the de facto EU lingua franca creates a positive externality of 17 billions per year towards the UK (Grin 2005). As a consequence, the UK linguistically 'pollutes' the Continental Europe at a cost of 17 billions per year. b. Pareto-Optimality Applied To a Lingua Franca We shall here return to the requirements of optimality for a policy outcome, and the said necessary choice of a common language (because of non-overlapping MSs' indifference curves on languages). The characteristics of an optimal policy outcome regarding the choice of a EU lingua franca are reviewed. The most efficient language is the one delivering the highest ratio between proficiency and learning costs. The quicker a language is learned, the more efficient this language is. Efficiency of a language is required not only for the sake of economic efficiency but also for truly enhancing linguistic diversity. Indeed, due to time and knowledge constraints, the less time spent in learning the chosen lingua franca, the greater the demand for additional foreign languages (especially for RM languages). As stated, the alternative proposed involves the promotion of linguistic diversity whereby a 'market-to-outcome' approach is favoured thereby enhancing the demand for RM languages instead of focusing on an increase in the supply of RM languages. The choice of a EU lingua franca can only be unique because inter-communication is possible between two different native-speakers as soon as they have a commonality of language. Two linguae francae would be sub-optimal due to ex ante over-investments. The marginal cost of learning an additional lingua franca is much greater than its marginal benefit (tantamount to zero). The learning of a language being a costly investment, individuals and firms want to maximize the returns derived from that language. The returns cannot be maximized if a new lingua franca emerges (for instance, the inefficiency of the shift from Russian to English in Eastern Europe after 1989). Lock-in effect and switching the costs of languages impose the stability requirement in linguistics parlance, the neutrality of a language. A language rises and falls as a lingua franca with the rise and fall of the political power that language is related to (Noss,1967:59) e.g. Greek with the Hellenistic Civilization, Latin with Roman Empire, French with the Grande Nation, German with the Deutsches Reich, Russian with the USSR, English with the British Empire and the US hyperpower. The "fortunes of languages are inexorably bound up with those of their users" (Edwards 1994:9). c. The Optimal Lingua Franca in The Real World The study of the optimal of the possible alternatives regarding a EU lingua franca is considered.
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Governments in the EU have introduced English as the first foreign language to learn in schools (voluntarily or mandatorily) for some decades now. However, considerably less the half of the EU population is able to effectively speak English. After years of studies in primary and secondary schools, the proficiency of a student in English is very low52. As a result, English has a low ratio of efficiency. English unquestionably creates externalities towards the UK. English is related to national powers and is the lingua franca as long as other national powers cannot challenge the English "hegemon" (Grin,2004,2005) hence its probable instability53. It takes almost a lifetime to learn and master Latin. Its efficiency ratio is very low, although no creating externality towards any MS of the EU. Latin as lingua franca would be stable since it is a (relatively) neutral language54. Concerning Esperanto, it can be mastered in 150 hours compared to 1,500 hours for English (Flochon 2000:109; Ministre Italien de l'Enseignement Public 1993). The Encyclopaedia Britannica (1929:861) states that "that grammar can be grasped in half an hour; every rule is without exception, the spelling is phonetic and the dictionary is small. Nevertheless, it has literary power, beauty, precision, flexibility and power of growth." Piron (2002) affirms that "a foreign language cannot be said to be mastered at the level required in international settings until one has accumulated at least 10,000 hours of study and practice. Only Esperanto differs from other languages in ease of acquisition: a mastery level can be reached in 150 to 220 hours". The efficiency of Esperanto compared to other natural languages has been clearly established (Pool 1980; Christiansen 2006). Not only does the learning of Esperanto renders available time and knowledge for additional languages learning, but above all the learning of Esperanto has a propedeutic value55 functioning as a investment for learning languages more rapidly (Kellerman 1910). Empirical researches have established an efficiency ratio from 1 to 10 when one compare the efficiency of Esperanto compared to the efficiency of English56. We shall be as prudent as Grin (2005:81), and adopt a ratio of 3 we hypothesize that Esperanto is

52

Only 22% of EU citizens say to have"very good" English (Eurobarometer 2006). Self-assessment of language proficiency are commonly said to be biased due to an overconfidence bias. In non-Germanic Europe, less than 1% of Europeans are "able to communicate more or less correctly in English at the end of their secondary studies", Source: Piron C., http://claudepiron.free.fr/articlesenanglais/power.htm 53 Nobel Prize Winner Reinhard Selten and Jonathan Pool explain the instability of English with recourse to game theory (Selten and Pool 1981; 1991; Selten 1997) whilst a wide-spread artificial language "might be stable" (Pool 1991b). 54 The neutrality of Latin is relative because Latin connotes the Roman Empire (from which half of Europe has never been under domination), and still connotes the Catholic Church as it is the official language of the Vatican State. 55 Empirical researches since one century have proven that the preliminary learning of Esperanto "led to a 25% improvement in acquiring Russian, 30% for German, 40% for English, 50% for French". Source: http://www.statemaster.com/encyclopedia/Propedeutic-value-of-Esperanto 56 Prof. Elgin who have taught Esperanto in the US writes: "But I can say without hesitation that if you speak and read almost any Germanic or Romance language you can learn to read Esperanto easily in three or four hours. If you know one Germanic and one Romance language English and Italian, for example, or German and French you can almost read it on sight without any instruction whatsoever" (Elgin,2000:198).
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mastered in 500 hours and English in 1,500 hours57. Wells affirms that "opposition to Esperanto is often more emotional than rational"(Wells 2003; Piron 1994b).Esperanto does not create any externality since it is the national or official language of no country in the world. Esperanto is fitted to be the language of supranational democracy (Archibugi 2005) and concretizes the notion of "linguistic democracy" especially for the EU (Fettes and Bolduc 1998:101-129). Esperanto would be stable because the rise and fall of national powers will have no effect on Esperanto.

In conclusion, Esperanto appears to have the characteristics of optimality should MSs engage in Coasian bargaining. Although Esperanto manifestly reveals its optimality, this outcome seems very improbable, especially when one reviews the current relevant literature. d. Literature Concerning The Choice of a EU Lingua Franca The academic debate presented here is stagnant, principally owing to the neglect of the reciprocal nature of the problem. Abram de Swaan promotes the adoption of English as the EU lingua franca because it is already the "supercentral language" in the "galaxy of languages" (De Swaan 1993b:220). Yet, De Swaan acknowledges that the hierarchization of languages is "contested", and that "language groups are struggling to defend or impose their idiom as the central medium, or to prevent another language from achieving a
57

Even with this highly prudent assumption, the efficiency of Esperanto is great enough not to create a lock-in effect with English and to overcome the switching costs, something proven with a simple calculus. If we optimistically assume that half of the EU citizens speak 'very good' English (250 millions EU citizens), then it costs: 250 millions x 1,500 h = 375 billions of hours of teaching for the entire EU citizenry to speak a 'very good' English. The cost of Esperanto is: 500 millions x 500 h = 250 billions of hours. It costs 1.5 times (375/250=1.5) more to have half of the EU citizens speaking 'very good' English than for every EU citizens to become fluent in Esperanto.
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position that their own cannot occupy" (De Swaan 1993b:220). These choices are "structured by developments in the spheres of politics, economics, and culture" (De Swaan 1993b:221) hence the "dynamics" (rather than stability) of the world language system. De Swaan recognizes that adopting English as EU lingua franca might certainly endanger even more RM languages in Europe but we must only "be aware of the dangers" (Bourdieu et al.,2001:54). Clearly nonoptimal: language barriers remain since English as de jure EU lingua franca cannot overcome what English as de facto EU lingua franca is unable to overcome, economic externalities are reinforced, and the subjective value attached to linguistic equality/diversity is denied. Because of these major pitfalls, English as the de jure EU lingua franca is not only welfare detrimental and linguistically damaging, but this solution is unrealistic (no unanimity might be reached because sub-optimal). Van Parijs (2000; 2002; 2004a; 2004b; 2007) considers that the EU imperatively needs one common language; English being inevitable. The interesting contribution is that, with a concern about linguistic justice, Van Parijs proposes a "linguistic tax" for repairing the externalities created in favour of the English-speaking countries in the world58. We shall define the linguistic tax proposed here to be a policy intervention involving the "Pigouvian tradition" (Coase 1960). The tax would consists of having "English-language specific journals available free of charge to all academics outside the English-speaking world, or by waiving intellectual property rights on the reproduction of English publications in any country in which English is not the mother tongue of the majority" (Van Parijs,2001:168). We shall only refer to Grin (2004b) for a comprehensive critic of this idea: the scenario 'allEnglish' reinforces the externalities already important (Grin,2005), places English even more as "hegemon", presupposes astronomical investments in teaching English in order to erase the differences between native speakers and non-native speakers. The "free-zones" proposed by Van Parijs where English only would be used are literally "enclaves of linguistic imperialism" (Grin 2004b). The "linguistic tax" is blatantly unrealistic: how can the UK and US subsidy by billions of Euros every year in order for the others to accept a "mere fealty" (Grin 2004b). We shall add that the irrealism of this idea is blatant because of the hypothesis that the free-riding countries would be willing to sovereignly tax themselves tomorrow in order to have something they can free-ride today. English-speaking countries would obviously be worse off through such arrangement, and no unanimity would result. The "linguistic tax" cannot completely compensate for the externalities since only economic externalities are considered; political and cultural externalities ("linguistic hegemony") are not taken into consideration. The "linguistic tax" is manifestly incapable of implementation. Grin (2005) proposes that Esperanto becomes the EU lingua franca due to its efficiency, neutrality (what we refer as 'stability'), and uniqueness: Esperanto clearly gathers the features of linguistic optimality. The linguistic justice sought by Van Parijs is even more evident in this scenario. However, this scenario appears to be unrealistic in the current state of the art in
58

Pool (1991a) in the same vein proposed to reconcile "efficiency" and "fairness" through taxes.
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Europe. Esperanto cannot become the EU lingua franca, not only because the current EU law on languages states that the languages of the EU can only be chosen from among the languages of the MSs (Regulation 1/58), but also and above all because the UK would not accept to abandon its free-ride. The scenario 'all-Esperanto' without accompanying measures is unrealistic given the current situation. e. The Reciprocal Nature of The Lingua Franca Problem We have reviewed the current literature related to the choice of a EU lingua franca, and we have seen that it is at a dead-end. Either the efficient solution ('all-Esperanto') seems unrealistic because of the lack of coordination and consensus, or the more probable solution ('all-English') incapable of implementation on account of the "linguistic tax". We argue that none of these propositions are realistic, and are flawed because they ignore the reciprocal nature of the problem. Either the linguistic hegemony of English requires a "linguistic tax" on every English-speaking country in the world (Van Parijs 2000; 2002; 2004a; 2004b), or this linguistic hegemony justifies the adoption of Esperanto as the EU lingua franca in order to cease the free-riding of the English-speaking countries (Grin; 2005). In both cases, UK is condemned as the 'generator' of a 'linguistic harm' whilst Continental Europe becomes the 'victim'. This is in line with the Pigouvian tradition, involving a one-sided causality view of externalities. The true nature of the problem is not to say that the UK generates the externality and thus begging the question "how should we restrain [the UK]?" (Coase1960). To avoid Continental Europe being 'linguistically harmed' would inflict a harm to the UK; to allow the UK to free-ride would inflict harm on Continental Europe. In Coasian language, the fundamental question to ask is: should Continental Europe ("the surrounding woods" in Coase's example) be entitled to be free from 'linguistic harm' ("the sparks"), or should the UK be entitled to impose English ("to run additional train")? The reciprocal nature of the present problem flows from a (double) scarcity. Indeed, there is a scarcity of space hence the proximity of UK and Continental Europe makes the 'linguistic pollution' possible and there is a scarcity of knowledge hence the need for one, and only one, lingua franca. Had Latin continued to be the European lingua franca, English could not have become the de facto EU lingua franca. Due to the disappearance of Latin, and due to the lack of coordination concerning the choice of a new European lingua franca, Continental Europe created the circumstances favourable for the rise of English as the de facto EU lingua franca. Pigouvian reasoning of causality concerning the determination of a 'generator' and a 'victim' of the damage is therefore proven to be flawed thereby rejecting the conspiracy theories re English (Phillipson
43

2007b). The solutions proposed in the literature assumes the Pigouvian approach of regulatory intervention. Our approach based on the Linguistic Coase Theorem only recommends Coasian bargaining. In order to predicate the particular outcome resulting from Coasian bargaining, we necessarily need full information, something we already have. Language barriers cost the EU economy at least 810 billions per year, the subjective value attached to linguistic diversity equals these costs. The UK gains 17 billions per year thanks to the free-ride of English as de facto EU lingua franca. Esperanto, a "living language" (Johns 1938), is ideally the optimal language (being efficient, unique and stable) with no lock-in effect from English. The Linguistic Coase Theorem states that no matter the initial entitlement of rights, with Coasian bargaining, the MSs will end up with a Pareto-optimal outcome re the choice of a EU lingua franca. We shall now envisage the two possible entitlements of rights. . Initial Entitlement of Rights on the UK If the UK and Ireland are entitled to linguistically harm Continental Europe, the UK should compensate for the economic and cultural externalities up to the point where the marginal cost of compensation toward Continental Europe equals the marginal benefit derived from English as the EU lingua franca. The UK should compensate for the opportunity costs of the non-removal of language barriers (again, English as de jure EU lingua franca shall not remove the language barriers borne under English as de facto EU lingua franca), and should compensate for the linguistic hegemony/hierarchization of languages and for the current free-ride. Concretely, the UK must be willing to make side-payments to Continental Europe to the tune of 17 billion per year whereas Continental Europe accepts at least a compensation for the overall costs created by choosing English as EU lingua franca i.e. hundreds of billions of Euros. No agreement can take place since the willingness of the UK to pay is much lower than the willingness of Continental Europe to accept such an outcome. Beyond 17 billion per year, the UK will decide not to compensate any more and would choose to adopt Esperanto since the costs of adopting Esperanto (17 billions per year) are lower than its expected benefits (a slice of the 810 billions per year). In conclusion, because Continental Europe will demand excessive side-payments from the UK, the UK will eventually decide to adopt Esperanto in order to reach unanimity, given an entitlement for the UK to 'linguistically pollute' Continental Europe. Initial Entitlement of Rights on The Continental Europe If Continental Europe is entitled to be free from linguistic damage, Continental Europe will naturally wish to adopt Esperanto. Indeed, Esperanto is the most efficient language,
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and therefore the costs of language barriers are minimized. If Continental Europe is entitled to be free from the linguistic 'pollution' of English, it will obviously not decide to be 'polluted' by any other national languages. Consequently Continental Europe will favour a neutral language, i.e. Esperanto. Furthermore, it will not have to compensate for any linguistic hegemony/hierarchization of languages owing to the neutrality of Esperanto, and the selfenhancement of linguistic diversity. However, Continental Europe will have to compensate the negative externality created by reference to the UK for the adoption of Esperanto which would impede the English free-ride. Concretely, the Continental Europe will compensate the externality created towards the UK by making side-payments of 17 billions per year, corresponding to the loss of linguistic free-riding by the UK. Above 17 billions per year, the marginal costs of compensation (the additional billion of Euros of side-payment) is greater than its marginal benefit (equal to zero since the UK consents to Esperanto because it is no worse off but is better off since it benefits from the removal of language barriers). Continental Europe adopting Esperanto is the 'cheapest cost avoider' (Calabresi 1970)59:

Both initial entitlements of rights bring about a Pareto-optimal and unique outcome
59

These figures are rough estimations and must not be accepted per se as precise financial assessment. The zero cost in language barriers when Esperanto is adopted might seem excessive, but our purpose is only to demonstrate that Esperanto minimizes the costs of language barriers. Incidentally, Grin (2005) found that the adoption of the sole use of Esperanto inside the EU institutions would create a saving of 20 billions per year; a gain we implicitly include in the said minimization of costs .
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the adoption of Esperanto as the de jure EU lingua franca. The outcome is unique, the different initial entitlements of rights only influencing the direction of the side-payments. Naturally, amongst the two initial entitlements of rights studied above, the initial entitlement of Continental Europe being free from linguistic harm is by far the more realistic one mainly due to two reasons. The first reason is moral acceptance: the right to impose English on Continental Europe would hardly be accepted since languages and cultures are said to be equal a "synarchic" model rather than an "hegemonic" solution (Grin,2008) is in all likelihood to be preferred. The second reason is economic realism: the right to impose English on Continental Europe would suppose the compensation for all externalities through enormous side-payments (hundreds of billions of Euros per year) borne by only one country. This sort of "linguistic tax" is presumably as unrealistic as the "linguistic tax" proposed by Van Parijs: the UK would rationally not accept to tax itself because of its sovereignty, and even if it did the free-riding of nonEuropean English-speaking countries would persuade the UK to compel with this tax. Although diametrically different, the model proposed by Van Parijs, and the model proposed by Grin not only ignore the reciprocal nature of the problem, but also are unrealistic because the sub-optimality of their models disallows unanimous consent, such a consent being of prime importance. The model we have developed is the most realistic one since unanimity can be reached (an economic and legal requirement) thanks to a Pareto-optimal outcome. We now sum up the prediction we have found concerning the linguistic outcome resulting from the Linguistic Coase Theorem: The Continental Europe shall compensate the UK 17 billions per year in order to adopt Esperanto as the EU lingua franca. All the externalities are repaired. With such enforceable agreement, every MS is made better off without any MS being worse off. The Pareto-optimality is achieved, unanimity is attained. Economic efficiency is maximized, along with an enhancement of linguistic diversity/equality the aforementioned dilemma is resolved.

IV. The Challenges of XXIst Century Europe: Competitiveness and Democracy This paper has applied a Law and Economics analysis to languages, a topic unfortunately thus far neglected by students of these disciplines. Our intention has been to break out of the 50-years old "great non-dit of the European integration" (De Swaan 2001:144) i.e. the EU language policy. We have proposed a Linguistic Coase Theorem with normative conclusions, and have
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predicted a reasonably possible Pareto-optimal linguistic outcome flowing from the Linguistic Coase Theorem. Recall that this outcome assumes the absence of strategic behaviour since such behaviour might preclude successful negotiations. A question remains unanswered about the emergence of Esperanto as the EU lingua franca: how can Europe communicate with the outside world? First of all, as stated above, the adoption of Esperanto not only grants enough time to learn useful languages for global communication be it English, Spanish, Chinnese etc., but it speeds up the acquisition of subsequent national languages thanks to its propedeutic value. Secondly, all truly global historical lingue franche (Greek, Latin, French, English), were always European languages reflecting the influence of Europe in this domain. Finally, one can wonder how the adoption of a language by the biggest economy in the world, representing 500 millions of consumers cannot create the incentive to learn this language which is both neutral and easily learned. The imperative to overcome language barriers within the EU is blatant because the EU aspires to be according to the "Lisbon Strategy" the most competitive economy in the world by 2010. More generally, competitiveness is one of the challenges Europe will face in a XXIst century characterized by important global competition. Another fundamental challenge Europe will have to face is to become a veritable democratic entity by solving the EU 'democratic deficit'. The challenges of a XXIst century Europe are competitiveness requiring a deepening of economic integration, and the emergence of a EU democracy requiring a strengthening of political integration. These two major challenges share language barriers as a common obstacle, barriers we have realistically sought to overcome by recommending an auspicious environment, i.e. the Linguistic Coase Theorem.

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Table of Cases: Case C-361/01 P (2003) "Kik v. OHMI",ECR I -8283 Case T-120/99 (2001) "Kik v. OHMI", ECR II -2235 C-424/97 (2000) "Haim v. Kassenzahnrztliche Vereinigung Nordrhein" ("Haim II"), ECR I 5123. C-366/98 (2000) "Geoffroy v. Casino France", ECR I -6579. C-33/97 (1999) "Colim NV v. Bigg's Continent Noord NV", ECR I -3175. Case C-42/97 (1999) "Parliament v. Council", ECR I-869. C-385/96 (1998) "Goerres", ECR I -4431. C-274/96 (1998) "Bickel and Franz", ECR I -7637. Case 80/76, (1997) "North Kerry Milk Products Ltd. V. Minister for Agriculture and Fisheries", ECR 425 Case C-72/95 (1996) "Aannemersbedrijf P.K. Kraaijeveld BV e.a. v. gedeputeerde Staten van Zuid-Holland", ECR I-05403. C-85/94 (1995) "VZM v. Peeters NV", ECR I -2955. Case C-449/93 (1995) "Rockfon A/S v. Specialarbejderforbudet", ECR I -4291. C-51/93 (1994) "Meyhui v. Schott Zwiesel Glaswerke", ECR I -3879. C-369/89 (1991) "Piageme v. BVBA Peeters", ECR I -2971. C-379/87 (1989) "Groener v. Minister for Education", ECR 3987 Case 100/84 (1985) "Commission of the European Communities v. United Kingdom of Great Britain and Northern Ireland", ECR 1196. C-120/78 (1979) "Rewe Zentrale v. Bundesmonopolverwaltung fr Branntwein" ("Cassis de Dijon"), ECR 649. Case 30/77 (1977) "Rgina v. Pierre Bouchereau", ECR 1999. C-8/74 (1974) "Procureur du Roi v. Dassonville", ECR 837.

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