Large Investors, Regulatory Taking and Investor-State Dispute Settlement
Kai Konrad
Working Papers from Max Planck Institute for Tax Law and Public Finance
Abstract:
This paper offers an economic analysis of an international investorstate dispute settlement regime (ISDS) in markets with large investors. It identifies a reason for strategic overinvestment by the domestic industry, leading to permissive regulation in the absence of ISDS. An "ideal" investor-state dispute settlement arrangement (e¢ ciency- oriented, transaction-cost free, with untouchable, fully reliable, and unbiased judges) has positive and negative effects in this framework. It generates an equal level playing field for domestic and foreign investors, but it magnifies an existing overinvestment problem and may reduce world welfare. The results explain anecdotal evidence according to which ISDS that protects foreign investors is liked by the domestic industry and disliked by other interest groups in the host country.
Keywords: Investment arbitration; settlement courts; time-consistent regulation; strategic investment (search for similar items in EconPapers)
JEL-codes: F21 F55 K11 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2016-11
New Economics Papers: this item is included in nep-int and nep-law
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https://www.tax.mpg.de/RePEc/mpi/wpaper/TAX-MPG-RPS-2016-10_2.pdf Full text (original version) (application/pdf)
Related works:
Journal Article: Large investors, regulatory taking and investor-state dispute settlement (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:mpi:wpaper:tax-mpg-rps-2016-10_2
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