Regulatory Cooperation and Competition - the Search for Virtue

71 Pages Posted: 18 Jul 1999

See all articles by Paul B. Stephan

Paul B. Stephan

University of Virginia School of Law

Date Written: June 1999


This article argues that proponents of international regulatory cooperation need to confront the welfare losses that might occur due to missed opportunities for cooperative regulatory competition. Cooperative regulatory competition takes places when jurisdictions agree to honor formal and manipulable choice-of-law rules, such as contractual choice, the place-of-incorporation rule, and the territoriality principle, that enable persons engaged in international business to pick regulatory systems that will govern their transactions. I review current opportunities for this kind of competition with respect to securities regulation, bankruptcy, intellectual property, and antitrust. I then discuss the substantive case for maintaining or expanding these opportunities in light of potential benefits from "races to the top." I base my argument partly on new research by cognitive psychologists on "fast and frugal heuristics." This research undermines arguments against respecting individual choices that have dominated much of the discussion about regulation in the legal academic literature over the last fifteen years.

Suggested Citation

Stephan, Paul B., Regulatory Cooperation and Competition - the Search for Virtue (June 1999). University of Virginia Law School, Legal Studies Working Paper No. 99-12. Available at SSRN: or

Paul B. Stephan (Contact Author)

University of Virginia School of Law ( email )

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