The Puzzle and an Explanation

Dale D. Murphy

in The Structure of Regulatory Competition

Published in print September 2006 | ISBN: 9780199216512
Published online March 2012 | e-ISBN: 9780191696008 | DOI:

Series: International Economic Law Series

The Puzzle and an Explanation

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Virtually every form of economic activity is subject to regulation. In the international arena, there is no overarching authority to resolve what legal scholars refer to as the ‘conflict of laws’ between different regulations. Over the long term, cross-border variations in initial sets of national policies may generate any of three basic trajectories or outcomes for a given issue: (i) movement toward a lower common denominator (LCD) via competition-in-laxity; (ii) movement toward a higher common denominator (HCD) via more stringent regulations; and (iii) persistence of diverse regulations allowing a heterogeneous (HET) regulatory climate. This chapter explains these trajectories and offers three related propositions that help predict when each will occur. The locus of regulations explains regulatory movement toward stringency or laxity. How a particular industry is structured explains the degree of change. The specificity of assets explains how homogenous the regulations are among states and it also affects movements towards or away from laxity. The subsequent chapters offer six detailed case studies: two for each of the three outcomes LCD, HCD, and HET.

Keywords: economic regulations; economic policy; cross-border variations; lower common denominator; higher common denominator; regulatory climate

Chapter.  16775 words.  Illustrated.

Subjects: Public International Law

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