A Strategic Interpretation of Legal Transplants

Nuno Garoupa and Anthony Ogus

The Journal of Legal Studies, 2006, vol. 35, issue 2, 339-363

Abstract: In this paper we provide a strategic explanation for the spontaneous convergence of legal rules that nevertheless, in many instances, falls short of unification across jurisdictions. We identify a free-riding problem and discuss its implications for legal integration. We argue that countries hesitate to adapt their laws to those of another jurisdiction because they hope to free ride on efforts toward convergence. Unification (by transplant) and harmonization (by convention) of legal rules emerge as obvious corrective interventions to a coordination failure, thus solving the free-riding problem. However, unification and harmonization could also be serious policy mistakes either because convergence is absent owing to very high costs of importing and adjustment or owing to agency costs.

Date: 2006
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Working Paper: A Strategic Interpretation of Legal Transplants (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:ucp:jlstud:v:35:y:2006:p:339-363

DOI: 10.1086/505053

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