Evolution and Spontaneous Uniformity: Evidence from the Evolution of the Limited Liability Company
Bruce H. Kobayashi
George Mason University - School of Law
Larry E. Ribstein
University of Illinois College of Law (deceased); PERC - Property and Environment Research Center
Economic Inquiry, Vol. 34, 1996.
This paper examines whether the process of unguided state by state evolution of Limited Liability Company (LLC) Statutes has lead to efficient interstate uniformity. Our evidence suggests significant uniformity has been produced in cases where the net benefits of uniformity are positive, and that such uniformity has not been produced by herd behavior. Our results are consistent with Alchian's intuition about the role of market processes, and suggests that the survival of efficient rules, fostered by the rational behavior of decentralized economic actors, are produced by forces beyond the control or foresight of individual lawmakers or legislatures.
JEL Classification: K22, P10, D72
Date posted: July 2, 1998