Regulatory Races: The Effects of Jurisdictional Competition on Regulatory Standards

Bruce G. Carruthers and Naomi R. Lamoreaux

Journal of Economic Literature, 2016, vol. 54, issue 1, 52-97

Abstract: 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)

JEL-codes: G18 G28 G38 H73 J08 L51 Q58 (search for similar items in EconPapers)
Date: 2016
Note: DOI: 10.1257/jel.54.1.52
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Citations: View citations in EconPapers (16)

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