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This paper deals with the principle of subsidiarity in asylum law. It exposes some of the most important ‘push’ factors that have been considered by the European Union (EU) as arguments for the centralisation of asylum law. Through the application of an economic approach, this text examines the need for harmonization of asylum standards to reach the goal established in Article 5 of the Treaty on European Union. An economic methodology is used to investigate the application of the subsidiarity principle by considering some of the most important economic criteria for both centralisation and decentralisation, and by applying the findings to the asylum law. Specifically, this paper considers the Tiebout model, the problem of the ‘race to the bottom’, the reduction of transaction costs, and the importance of the protection of refugee human rights. These theories are commonly used in the cases of a specific issue with a transboundary nature, which produces [negative] international externalities. In addition, they reflect the significance of equal conditions within the EU Member States as well as the role of the EU as a sui generis organisation protecting human rights. It should be noted that this paper does not deal with the basic normative question of whether or not refugees deserve protection, but it aims to expose the advantages and disadvantages of an EU asylum policy. In its conclusion, the paper discusses the advantages of a centralised EU policy that also allows, within certain conditions, some type of competition between the Member States.