This compliance study models correct and timely implementation of policies in a multilevel system as a strategic game between a central monitoring agency and multiple implementers and evaluates statistically the empirical implications of this model. We test whether compliance is determined by the anticipated enforcement decision of the monitoring agency and whether this agency is responsive to the probability of enforcement success and the potential sanctioning costs produced by noncomplying implementers. Compared to other monitoring systems, the centralized monitoring system of the European Union (EU) is praised for exemplary effectiveness, but our findings reveal that the monitoring agency refrains from enforcing compliance when the probability of success is low, and the sanctioning costs are high. This results in a compliance deficit, even though the selective enforcement activities of the monitoring agency are almost always successful before court.
