On Regulatory Arbitrage

89 Texas Law Review See Also, 69 (2011)

10 Pages Posted: 9 Jun 2011 Last revised: 20 Jul 2015

See all articles by Jordan M. Barry

Jordan M. Barry

University of Southern California Gould School of Law

Date Written: June 7, 2011


This comment supplements and critiques the analytical framework put forth by Victor Fleischer in his recent work, Regulatory Arbitrage. It makes three main points. First, professional constraints on regulatory arbitrage are more valuable than has previously been acknowledged. Second, Fleischer correctly highlights how ongoing relationships allow parties to change the structures of their transactions to avoid regulations, yet still asserts that anti-avoidance legal rules are among the most effective tools to prevent regulatory arbitrage. Surprisingly, Fleischer understates this argument by failing to consider the extent to which such rules prevent family members, who are frequently joined by the tightest bonds of all, from engaging in regulatory arbitrage. Lastly, this comment takes issue with analogizing regulatory arbitrage to financial arbitrage, as well as the proposed categorization of various types of regulatory arbitrage. Each of these approaches diverts attention away from the underlying cause of regulatory arbitrage: legal rules that do not accurately track the economic substance of transactions.

Keywords: Regulatory Arbitrage, Tax, Regulatory Competition, Transaction Costs, Transaction Structures

Suggested Citation

Barry, Jordan, On Regulatory Arbitrage (June 7, 2011). 89 Texas Law Review See Also, 69 (2011), Available at SSRN: https://ssrn.com/abstract=1859750

Jordan Barry (Contact Author)

University of Southern California Gould School of Law ( email )

699 Exposition Blvd.
Los Angeles, CA 90089
United States

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