Large investors, regulatory taking and investor-state dispute settlement

Kai Konrad

European Economic Review, 2017, vol. 98, issue C, 341-353

Abstract: This paper offers an economic analysis of an international investor-state 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 (efficiency- 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)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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Related works:
Working Paper: Large Investors, Regulatory Taking and Investor-State Dispute Settlement (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:98:y:2017:i:c:p:341-353

DOI: 10.1016/j.euroecorev.2017.07.002

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