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

Posted: 24 Feb 2011  

Stefano Lombardo

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: 2009

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

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 (2009). European Business Organization Law Review, Vol. 10, No. 1, 2009. Available at SSRN: https://ssrn.com/abstract=1484807

Stefano Lombardo

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 (Contact Author)

University of Bologna - Department of Economics ( email )

Piazza Scaravilli, 2
Bologna, Bo 40126
Italy

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

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