Disintegrating the Regulation of the Business Corporation as a Nexus of Contracts: Regulatory Competition vs. Unification of Law

36 Pages Posted: 24 Mar 2008

See all articles by Stefano Lombardo

Stefano Lombardo

European Corporate Governance Institute (ECGI); Free University of Bozen-Bolzano - CRELE Center for Research in Law and Economics; Free University of Bozen-Bolzano - Faculty of Economics and Management

Piero Pasotti

University of Bologna - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: March 2008

Abstract

We apply the paradigm of the firm as a nexus of contracts to the debate on regulatory competition vs. unification of law as an alternative way of regulating the business corporation. This approach views the business corporation as a set of coordinated contracts among different parties. Agency problems and related agency costs are the result of this interaction. The economic analysis of corporate law, securities regulation and bankruptcy law identifies law as a means to minimize such agency costs. In this paper we develop a model where companies are heterogeneous in their preferences about the legal regulation of contractual relationships. We then compare a regime of regulatory competition to a regime of single supply of regulation and we analyse their relatives costs and benefits.

Keywords: corporate governance, regulatory competition, forum shopping, unification of law, theory of the firm, agency costs, corporate law, securities regulation, bankruptcy law, choice of law.

JEL Classification: K20, K22, L51

Suggested Citation

Lombardo, Stefano and Pasotti, Piero, Disintegrating the Regulation of the Business Corporation as a Nexus of Contracts: Regulatory Competition vs. Unification of Law (March 2008). ECGI - Law Working Paper No. 102/2008, Available at SSRN: https://ssrn.com/abstract=1112091 or http://dx.doi.org/10.2139/ssrn.1112091

Stefano Lombardo (Contact Author)

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Free University of Bozen-Bolzano - CRELE Center for Research in Law and Economics ( email )

Free University of Bolzano
Piazza Universita
Bolzano, BZ 39100
Italy

Free University of Bozen-Bolzano - Faculty of Economics and Management

Piazza Universita
Bolzano-Bozen (BZ), 39100
Italy
+39 0471 013491 (Phone)

Piero Pasotti

University of Bologna - Department of Economics ( email )

Piazza Scaravilli, 2
Bologna, Bo 40126
Italy

HOME PAGE: http://sites.google.com/site/pieropasottiswebpage/

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
312
Abstract Views
1,350
rank
109,711
PlumX Metrics