Regulatory Co-opetition: Transcending the Regulatory Competition Debate
George Mason University School of Law; Tilburg University - Tilburg Law and Economics Center (TILEC)
Joseph A. McCahery
Tilburg University - School of Law; European Banking Center (EBC); European Corporate Governance Institute (ECGI); Duisenberg School of Finance; Tilburg Law and Economics Center (TILEC)
Amsterdam Center for Law & Economics Working Paper No. 2005-06
In this paper, we critically examine the theory of regulatory competition. The departure point of this theory is that governments compete for factors of production - and also to attract habitants - when they regulate. Thus, regulation should satisfy citizen preferences if competition is effective. In general, it is argued that decentralized regulation produces more efficient results, because at the level of local government competition is greater. We discuss the main lines of this theoretical perspective and point to their normative implications. We then criticize the oversimplification of the theory and suggest an alternative approach, namely 'regulatory co-opetition'. This approach considers three main dimensions of competition and cooperation, including 'extra-governmental', in which nongovernmental actors also play a role. We argue that this multi-dimensional approach clarifies the complexity of actual regulatory strategies, in which different combinations of competition and cooperation are present in relationships between different actors involved in the regulatory arena. Each dimension influences the regulatory behavior of actors, creating pressures and opportunities.
Number of Pages in PDF File: 24
Keywords: Regulatory competition, regulatory co-opetition, decentralization, nongovernmental actors
JEL Classification: H11, K20
Date posted: October 19, 2005
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