European Corporate Laws, Regulatory Competition and Path Dependence

Posted: 17 Dec 2007

See all articles by Wolfgang Kerber

Wolfgang Kerber

University of Marburg - School of Business & Economics

Klaus Heine

Erasmus University Rotterdam (EUR), Erasmus School of Law

Abstract

Beyond the well-known discussion in regard to the Cassis de Dijon of the European Court of Justice, implying the mutual recognition of national product regulations, the topic of mutual recognition and regulatory competition has emerged again in the realm of European corporate laws (Centros of the ECJ in 1999). Can effective competition among European corporate laws be expected? In the US a broad discussion has developed whether the existing competition process among US corporate laws leads to permanent legal improvements by legal innovations or to a race to the bottom. Beyond this discussion a new point has been raised recently: the possibility and importance of path dependence as a potential problem for the efficacy of competition among corporate laws (lock-ins). For the analysis of this problem we apply the concept of technological paradigms and trajectories to legal rules in corporate law and introduce legal paradigms, which direct the search for better legal solutions in certain directions and might be stabilized by certain factors (esp. complementarities to other legal rules) leading to considerable path dependence effects. Our results show that path dependence might play a crucial role for competition among European corporate laws, even if the principle of mutual recognition would be introduced to corporate laws in the EU, implying that competition among European corporate laws might be difficult and sluggish. Consequently the question arises whether additional meta-rules should be established that might mitigate the problem of path dependence and lock-ins in regulatory competition in corporate law.

Keywords: European corporate law, regulatory competition, path dependence, choice of law

JEL Classification: F02, G3, K22

Suggested Citation

Kerber, Wolfgang and Heine, Klaus, European Corporate Laws, Regulatory Competition and Path Dependence. European Journal of Law and Economics, Vol. 13, 2002. Available at SSRN: https://ssrn.com/abstract=1075326

Wolfgang Kerber (Contact Author)

University of Marburg - School of Business & Economics ( email )

Am Plan 2
Marburg, D-35037
Germany
+49 6421 2823921 (Phone)

Klaus Heine

Erasmus University Rotterdam (EUR), Erasmus School of Law ( email )

3000 DR Rotterdam
Netherlands

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