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Exit and the American Illness

33 Pages Posted: 23 Jan 2011  

Erin A. O'Hara O'Connor

Florida State University - College of Law; Gruter Institute for Law and Behavioral Research

Larry E. Ribstein

University of Illinois College of Law (deceased); PERC - Property and Environment Research Center

Date Written: January 21, 2011

Abstract

This essay, prepared for a book on the effect of regulatory, liability, and litigation inefficiencies on the global competitive position of the U.S., focuses on the role of the US federal system. We show that, although multiple US states offer significant potential for jurisdictional choice to address misguided or inappropriate law, this system is only a partial solution to these problems and can itself be a source of bad law and excessive litigiousness. Federal law and enforcement of contractual choice-of-law, choice-of-court, and arbitration clauses provide some, but only partial, relief. As a result, choice of law and jurisdiction rules potentially expose firms that do business nationally or internationally to oppressive law in any of the US states. Without reform of the rules regarding jurisdictional choice the US is losing an opportunity to exploit the edge in international competition it might get from its federal system.

JEL Classification: K12, K13, K22, K41

Suggested Citation

O'Hara O'Connor, Erin A. and Ribstein, Larry E., Exit and the American Illness (January 21, 2011). Illinois Program in Law, Behavior and Social Science Paper No. LBSS11-08; Vanderbilt Public Law Research Paper No. 11-5; Vanderbilt Law and Economics Research Paper No. 11-9. Available at SSRN: https://ssrn.com/abstract=1745141 or http://dx.doi.org/10.2139/ssrn.1745141

Erin O'Hara O'Connor

Florida State University - College of Law ( email )

425 W. Jefferson Street
Tallahassee, FL 32306
United States

HOME PAGE: http://www.law.fsu.edu/our-faculty/deans/ohara-oconnor

Gruter Institute for Law and Behavioral Research

158 Goya Road
Portola Valley, CA 94028
United States

Larry Ribstein (Contact Author)

University of Illinois College of Law (deceased)

PERC - Property and Environment Research Center

2048 Analysis Drive
Suite A
Bozeman, MT 59718
United States

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