The States as a Laboratory: Legal Innovation and State Competition for Corporate Charters
Yale Law School; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)
April 18, 2005
ECGI - Law Working Paper No. 34/2005
Yale Law & Economics Research Paper No. #
Corporate law is an arena in which the metaphor of the states as a laboratory describes actual practice, and, for the most part, this is a laboratory that has worked reasonably well. The goal of this paper is to map out over time the diffusion of corporate law reforms across the states. The law-making pattern we observe indicates a dynamic process in which legal innovations originate from several sources, and a period of legal experimentation that tends to identify a statutory formulation that is adopted by the vast majority of states. Delaware and the Model Act quite often work in tandem. But there are occasions when they advance differing legal rules, accounting for some of the diversity in corporation codes that we observe. Prepared for the Conference on Promoting the General Welfare: American Democracy and the Political Economy of Government Performance at the University of Virginia, November 12-13, 2004.
Number of Pages in PDF File: 59
Keywords: Corporate law, corporate governance, legal innovation, regulatory competition
JEL Classification: G34, G38, K22
Date posted: April 19, 2005
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