In the US it is principally the states that are in charge of regulating the internal affairs of corporations. States allow firms to relocate in other states. Hence, it is argued that states are engaging in a process of competing for corporate charters.
In the EU this basic setting is today quite similar: the EU Member States have separately created their own corporate law systems for decades. Though only since the European Court of Justice (ECJ) ruled in a series of famous decisions from Centros to Inspire Art that Member States have to recognize firms who are incorporated under other Member States’ corporate law, the possibility for regulatory competition in corporate is opened in the EU as well.
Comparing the situations in Europe and America from a law and economics perspective, the guiding hypothesis of this thesis is that while regulatory competition in corporate law can lead to efficient results, several problems have to be taken into account. Inefficiencies in American and European regulatory competition in corporate law are mainly due to these problems. A possible normative solution to such inefficiencies is assessed.
Other findings of this thesis involves the following aspects:
Firstly, while regulatory competition in corporate law in the U.S. might have been economically efficient in the past, it now can be identified several factors that lead to suboptimal outcomes which can be explained positively by applying existing theories on the issue as complementary ones.
Secondly, the European legal and economic situation resembles important factors of the American one while there are some major differences that will probably lead to different outcomes to those in the U.S. – though these are suboptimal as well.
Thirdly, a normative conclusion is drawn from these comparative observations. It can be efficient to restructure the framework in which regulatory competition in corporate law takes place in both, the U.S. and the EU. It is proposed a form of procedural harmonization and a simplification of conflict of laws that will allow states to compete for separate modules of legal sectors in corporate law. Thus innovation and learning processes in corporate regulations will be easier comparable and a sustainable race to the top may begin.
Inhaltsverzeichnis (Table of Contents)
- A. Introduction
- B. Literature Overview
- 1. Race to the Bottom
- 2. Race to the Top
- 3. Race to somewhere in between
- 4. No Race at all
- 5. Race with the federal legislator
- 6. The European Debate
- 7. Summary and Empirical Evidence
- a. The American Case
- b. The European Case
- C. Theoretical Foundations of Regulatory Competition
- 1. Jurisdictions as Monopolies or Competitors
- 2. The Market for Regulations
- 3. Interjurisdictional Competition
- 4. Forms of Regulatory Competition
- 5. The Object of Corporate Law: the Firm
- a. Necessity of Corporate Law
- b. Agency Problems in Corporate Law
- D. Functioning of Regulatory Competition in Corporate Law
- 1. Conditions of Regulatory Competition
- a. Sufficient Number of Regulators
- b. Mobility of Citizens or Product Factors
- 2. Advantages of Regulatory Competition
- a. Legitimacy
- b. Limitation of Power
- c. Less Rent-Seeking Activities
- d. Satisfaction of Heterogeneous Preferences
- e. Learning, Innovation and flexibility
- f. Comparative Regulatory Advantages
- g. Faster Adjustment to Beneficial Ownership Patterns
- 3. Problems of Regulatory Competition
- a. Interstate and Network Externalities
- b. Path Dependencies
- c. Lacking Incentives for States
- d. Information Problems
- aa. Uncertainty of Conflict of Laws Rules
- bb. Bounded Rationality
- e. Conclusive Summary
- 4. Possible Solution: “Modulization” and Conflict of Laws facilitation
- 1. Conditions of Regulatory Competition
- E. Conclusion
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This thesis aims to analyze regulatory competition in corporate law in Europe and the United States, comparing their respective legal frameworks and exploring the potential for efficiency in this context. The study focuses on the following key themes:- The impact of regulatory competition on the development of corporate law in both the US and the EU.
- The challenges and limitations of regulatory competition, including interstate and network externalities, path dependencies, and information problems.
- The potential for “modulization” and conflict of laws facilitation as solutions to improve efficiency in regulatory competition.
- The role of courts and judges in interpreting conflict of laws rules and their impact on the overall regulatory landscape.
- A comparative analysis of the legal and economic environments in the US and EU, highlighting key similarities and differences in their regulatory approaches.
Zusammenfassung der Kapitel (Chapter Summaries)
- A. Introduction: This chapter introduces the study's context, outlining the recent decisions by the European Court of Justice (ECJ) that have opened the door for regulatory competition in corporate law within the EU. The introduction also sets the stage for a comparative analysis of the EU and US models, drawing attention to the historical development of corporate law in both regions.
- B. Literature Overview: This chapter examines existing literature on regulatory competition, exploring various perspectives including the "race to the bottom," "race to the top," and "race to somewhere in between" arguments. It summarizes empirical evidence for both the American and European contexts, providing insights into the dynamics of regulatory competition in corporate law.
- C. Theoretical Foundations of Regulatory Competition: This chapter delves into the theoretical underpinnings of regulatory competition, examining the concepts of jurisdictions as monopolies or competitors, the market for regulations, and different forms of interjurisdictional competition. It also explores the nature of corporate law and its role in addressing agency problems within firms.
- D. Functioning of Regulatory Competition in Corporate Law: This chapter investigates the practical implications of regulatory competition in corporate law, analyzing conditions for its effectiveness, potential advantages, and inherent challenges. It discusses the impact of interstate and network externalities, path dependencies, and information problems on regulatory competition, ultimately leading to a conclusive summary of its functioning.
Schlüsselwörter (Keywords)
This study explores the field of regulatory competition in corporate law, encompassing legal and economic perspectives. Key concepts include: corporate law, regulatory competition, interstate competition, network externalities, path dependencies, information problems, conflict of laws, legal harmonization, "modulization," and "race to the top."- Quote paper
- LL.M. Robin Eyben (Author), 2006, Comparative Economic Analysis of Regulatory Competition in Corporate Law in Europe and the United States, Munich, GRIN Verlag, https://www.grin.com/document/76250
