ertically within the EU, emphasising the importance of subsid iarity, 42 and, paradoxically for deregulation is linked to the perceived dangers of centralisation as giving rise to rent. re to the importance of emulation between national legislators as a factor of integration. 43 Des seeking and problems of public choice, excessive bureaucratisation and an inability to respond to individual preferences. 4 Lowering the level at which regulation takes place in order to introduce more market pressure on legislators implies reintroducing the conflict of laws in fields which might have been mapped out for unification. However, as an economic tool of federalism, the conflict of laws has to fit into a sophisticated, multi-level scheme which affects its trad itional function in several ways. Firstly, by maintaining a field of free regulatory competition between national laws, it is an important instrument in the vertical allocation of competences within the Union(a). Secondly, under the pressure of market integration, it has simultaneously to promote fundamental market freedoms(b). Finally, extend ing its scope to the market for public goods, it must ensure that competition between national economic policies remains undistorted (c) 8. (a) Setting the vertical allocation of competences. European contract law+5 rests upon the distinction between centrally harmonised regulation, designed to cure market failures, 46 on the one hand, and national choice-facilitating rules+ which remain amenable to the conflict of laws, and in particular to free party choice, on the other. 48 Party autonomy thus operates within a centralised regulatory framework which cures informational asymmetries and restrictions of competition. 49 However, ensuring the full cross-border effect of party The links between subsidiarity and regulatory competition on various levels also give rise to an abundant literature. See, for example, R van den Bergh, Subsidiarity as an Econom ic Demarcation Principle and the Emergence of European Private Law, 5 Maastricht Journal 129(1998); George Bermann, " European Community Law from a US Perspective, 4 TulJInt7& Comp L5(1995) Christian Kirchner, The Principle of Subsidiarity in the Treaty on European Union: A Critique from the Perspective of Constit utional Economics TulJ Int'l& Comp L 291(1998), Breton, Cassone& Fraschini, "Decentralization and Subsidiarity: Toward a Theoretical Reconciliation,, 19U PaJ Int/ Econ L 21(1998) ee Demarcation Principle, on competition as a learning process and its contribution to integratio Kerber, "Interjurisdictional Competition,, 218 This distinction is central to the 1980 Rome Convention on the Law Applicab le to Contractual Obligations, where it appears in article 3(party freedom )and articles 5 to 7(intemational mandatory rules The regulation of market failures is designed essentia ly to remedy informationalasy mmetries, through mandatory disclosure rules(on the priority given by the ECJ as from its Cassis de Dijon ruling in 1979to mandatory disclosure over substantive protection, see Grundmann, The Structure of European Contract Law 513). Market failures are also addressed through Community rules against restriction of competition, caught by article 7. State failure, as opposed to market breakdown, is addressed through subsidiarity These are essentially the rules of classical contract law perta ining to the formation and perfo the contract, and designed to help parties use their market freedom Nationalrules of this category are not subject to scrutiny under fundamental freedoms: ECJ Alsthom Atlantique, 24 Jan 1991, C-339/89 49 Protective legislation applica ble to cross-border consumer contracts or internationalsecurities transactions, such as those adopted by European Community secondary legislation, are designed to eradicate ormational asymmetries, which might otherwise lead to faulty choice-includ ing choice of the applicable law focus of Community law on disclosure rather than on substantive rules of consumerprotectionvertically within the EU, emphasising the importance of subsidiarity,42 and, paradoxically, as to the importance of emulation between national legislators as a factor of integration.43 Desire for deregulation is linked to the perceived dangers of centralisation as giving rise to rent￾seeking and problems of public choice, excessive bureaucratisation and an inability to respond to individual preferences.44 Lowering the level at which regulation takes place in order to introduce more market pressure on legislators implies reintroducing the conflict of laws in fields which might have been mapped out for unification. However, as an economic tool of federalism, the conflict of laws has to fit into a sophisticated, multi-level scheme, which affects its traditional function in several ways. Firstly, by maintaining a field of free regulatory competition between national laws, it is an important instrument in the vertical allocation of competences within the Union (a). Secondly, under the pressure of market integration, it has simultaneously to promote fundamental market freedoms (b). Finally, extending its scope to the market for public goods, it must ensure that competition between national economic policies remains undistorted (c). 8. (a) Setting the vertical allocation of competences. European contract law45 rests upon the distinction between centrally harmonised regulation, designed to cure market failures,46 on the one hand, and national choice-facilitating rules47 which remain amenable to the conflict of laws, and in particular to free party choice, on the other.48 Party autonomy thus operates within a centralised regulatory framework which cures informational asymmetries and restrictions of competition.49 However, ensuring the full cross-border effect of party 42 The links between subsidiarity and regulatory competition on various levels also give rise to an abundant literature. See, for example, R van den Bergh, ‘Subsidiarity as an Economic Demarcation Principle and the Emergence of European Private Law’, 5 Maastricht Journal 129 (1998); George Bermann, ‘European Community Law from a US Perspective’, 4 Tul J Int’l & Comp L 5 (1995); Christian Kirchner, ‘The Principle of Subsidiarity in the Treaty on European Union: A Critique from the Perspective of Constit utional Economics’, Tul J Int’l & Comp L 291 (1998), Breton, Cassone & Fraschini, ‘Decentralization and Subsidiarity: Toward a Theoretical Reconciliation’, 19 U Pa J Int’l Econ L 21 (1998). 43 See Kerber, ‘Interjurisdictional Competition’, and Van den Bergh, ‘Subsidiarity as an Economic Demarcation Principle’, on competition as a learning process and its contribution to integration. 44 Kerber, ‘Interjurisdictional Competition’, 218. 45 This distinction is central to the 1980 Rome Convention on the Law Applicab le to Contractual Obligations, where it appears in article 3 (party freedom) and articles 5 to 7 (international mandatory rules). 46 The regulation of market failures is designed essentially to remedy informational asymmetries, through mandatory disclosure rules (on the priority given by the ECJ as from its Cassis de Dijon ruling in 1979 to mandatory disclosure over substantive protection, see Grundmann, ‘The Structure of European Contract Law’, 513). Market failures are also addressed through Community rules against restriction of competition, caught by article 7. State failure, as opposed to market breakdown, is addressed through subsidiarity. 47 These are essentially the rules of classical contract law pertaining to the formation and performance of the contract, and designed to help parties use their market freedom. 48 National rules of this category are not subject to scrutiny under fundamental freedoms: ECJ Alsthom Atlantique, 24 Jan 1991, C-339/89. 49 Protective legislation applicable to cross-border consumer contracts or international securities transactions, such as those adopted by European Community secondary legislation, are designed to eradicate informational asymmetries, which might otherwise lead to faulty choice - including choice of the applicable law. On the focus of Community law on disclosure rather than on substantive rules of consumer protection