Tech, Regulatory Arbitrage, and Limits
European Business Organization Law Review (Forthcoming)
European Corporate Governance Institute (ECGI) - Law Working Paper No. 455/2019
47 Pages Posted: 31 May 2019 Last revised: 15 Jul 2019
Date Written: May 24, 2019
Abstract
Regulatory arbitrage refers to structuring activity to take advantage of gaps or differences in regulations or laws. Examples include Facebook modifying its terms and conditions to reduce the exposure of its user data to strict European privacy laws, and Uber and other platform companies organizing their affairs to categorize workers as non-employees. This essay explores the constraints and limits on regulatory arbitrage through the lens of the technology industry, known for its adaptiveness and access to strategic resources. Specifically, the essay explores social license and the bundling of laws and resources as constraining forces on regulatory arbitrage, and the legal mismatch that can arise from new business models and innovations as a key area in which the limits of regulatory arbitrage can be observed.
Keywords: regulatory arbitrage, technology, innovation, regulation, competition, social license, social contract, social responsibility, bundling, innovation cluster, regulatory entrepreneurship
JEL Classification: K2, K4, L5
Suggested Citation: Suggested Citation
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