Interjurisdictional Competition and Regulatory Advantage

As formal trade and investment barriers fall, government regulations– what once were domestic policy matters – becomeissues of international concern. International commerce createsthe potential for competition among regulatory jurisdictions.This article explains why there is variation in these regulatorytrends. Three general ‘trajectories’ are: (a) convergenceamong countries toward less stringent regulations in some cases,(b) convergence toward more stringent regulations in others,while in still other cases (c) differences persist among countries.I offer three (related) propositions which explain the differentregulatory trajectories: #1) Regulations on production processestend toward laxity; whereas product market-access regulationstend toward stringency. #2) Industrial structure affects thestrength of the process/market-access distinction. Powerfulfirms in concentrated markets facilitate collective action andregulatory capture. Dominant producers push for process andmarket-access regulations which reflect their interests, givingthem a competitive regulatory advantage in world markets. #3)The asset specificity of investments affects regulatory convergence.Low asset specificity leads to a competition-in-laxity; highmultinational asset specificity leads to convergence among jurisdictions(as firms seek to lower their transaction costs); and domesticasset specificity leads to differences among jurisdictions.Detailed case studies (on offshore banking, capital requirements,and infant formula) suggest the propositions are necessary tounderstand general outcomes, although not sufficient to fullyexplain individual cases.     

Reviews

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The issue of standing in cost-benefit analysis

Insufficient attention has been given in cost-benefit analysis to whose benefits are to be counted. Foreigners, illegal aliens, fetuses, and criminals are problematic cases. Persons or entities may be given “standing” by participation in decision processes; by having their preferences counted, if meaningful preferences exist; by having their welfare counted, if they cannot express their preferences; or by representation by others whom they do not choose. Problems of standing arise in the valuation of life, the consideration of future generations and nonhuman entities, and equity weighting. These problem may be treated by altering the scope of the expert community or by interaction between that community and the political community. They are not always resolvable, but should be treated more explicitly.