Adopts the conceptual tools of agency theory to rethink the challenge of federal governance under conditions of broad concurrency in the allocation of competences by examining the relations between states and the union as instances of principal–agent relationships, and considering the different kinds of ‘mechanisms of control’ available to the agents. After exploring the theoretical implications of principal–agent theory for issues of intergovernmental structures, an examination is made of the different tiered regimes of the USA and the EU for evidence of the mechanisms suggested by the theoretical analysis. It is argued that these tiered regimes feature several characteristic mechanisms that may help sustain the legitimacy of allocations of authority between different levels, and that the policy debate surrounding federalism should include attention to these mechanisms, along with the discussion of the appropriateness of centralization or decentralization. The different sections of the chapter are: Allocation and Legitimacy from a Principal–Agent Perspective; Mechanisms for Securing Allocational Legitimacy; and Federalism and Allocational Legitimacy.
Keywords: allocation of competences, allocational legitimacy, centralization, decentralization, EUfederal governance, federalism, governance, intergovernmental structures, legitimacy, mechanisms of control, principal–agent relationships, tiered regimes, USA