TY - JOUR
T1 - Regulatory races
T2 - The effects of jurisdictional competition on regulatory standards
AU - Carruthers, Bruce G.
AU - Lamoreaux, Naomi R.
N1 - Copyright:
Copyright 2016 Elsevier B.V., All rights reserved.
PY - 2016/3
Y1 - 2016/3
N2 - This article surveys the literature on regulatory arbitrage in four settings: labor regulation, environmental protection, corporate governance, and banking and finance. For a regulatory race to occur, firms must migrate across state or country borders in response to geographic differences in the costs and benefits of regulation, and governments must shape their regulatory policies with the aim of affecting those migration flows. We find that both these conditions hold only in rare circumstances. Instead, the much more common outcome is for political pressures within jurisdictions to produce a heterogeneous pattern resembling Tiebout sorting. Such regulatory convergence as occurs is more often the result of deliberate harmonization or imitation. (JEL G18, G28, G38, H73, J08, L51, Q58).
AB - This article surveys the literature on regulatory arbitrage in four settings: labor regulation, environmental protection, corporate governance, and banking and finance. For a regulatory race to occur, firms must migrate across state or country borders in response to geographic differences in the costs and benefits of regulation, and governments must shape their regulatory policies with the aim of affecting those migration flows. We find that both these conditions hold only in rare circumstances. Instead, the much more common outcome is for political pressures within jurisdictions to produce a heterogeneous pattern resembling Tiebout sorting. Such regulatory convergence as occurs is more often the result of deliberate harmonization or imitation. (JEL G18, G28, G38, H73, J08, L51, Q58).
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U2 - 10.1257/jel.54.1.52
DO - 10.1257/jel.54.1.52
M3 - Review article
AN - SCOPUS:84962574512
VL - 54
SP - 52
EP - 97
JO - Journal of Economic Literature
JF - Journal of Economic Literature
SN - 0022-0515
IS - 1
ER -