The Economics of Investor Protection: ISDS versus National Treatment

Wilhelm Kaspar Kohler and Frank Stähler

VfS Annual Conference 2016 (Augsburg): Demographic Change from Verein für Socialpolitik / German Economic Association

Abstract: This paper scrutinizes the effects of investor-state dispute settlements (ISDS) and national treatment provisions in a two-period model where foreign investment is subject to domestic regulation and a holdup problem. It shows that ISDS can mitigate the holdup problem and increases aggregate welfare, but comes with additional regulatory distortions for the first period. A national treatment provision avoids these regulatory distortions, but implies entry distortions because it makes the holdup problem also apply to domestic firms. If the domestic regulatory framework applies to many domestic firms, a national treatment provision welfare-dominates ISDS.

JEL-codes: F21 F23 F53 (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-int
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Citations: View citations in EconPapers (11)

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Related works:
Journal Article: The economics of investor protection: ISDS versus national treatment (2019)
Working Paper: The Economics of Investor Protection: ISDS versus National Treatment (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc16:145652

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