The States as a Laboratory: Legal Innovation and State Competition for Corporate Charters

59 Pages Posted: 19 Apr 2005

See all articles by Roberta Romano

Roberta Romano

Yale Law School; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)

Date Written: April 18, 2005


Corporate law is an arena in which the metaphor of the states as a laboratory describes actual practice, and, for the most part, this is a laboratory that has worked reasonably well. The goal of this paper is to map out over time the diffusion of corporate law reforms across the states. The law-making pattern we observe indicates a dynamic process in which legal innovations originate from several sources, and a period of legal experimentation that tends to identify a statutory formulation that is adopted by the vast majority of states. Delaware and the Model Act quite often work in tandem. But there are occasions when they advance differing legal rules, accounting for some of the diversity in corporation codes that we observe. Prepared for the Conference on Promoting the General Welfare: American Democracy and the Political Economy of Government Performance at the University of Virginia, November 12-13, 2004.

Keywords: Corporate law, corporate governance, legal innovation, regulatory competition

JEL Classification: G34, G38, K22

Suggested Citation

Romano, Roberta, The States as a Laboratory: Legal Innovation and State Competition for Corporate Charters (April 18, 2005). ECGI - Law Working Paper No. 34/2005, Yale Law & Economics Research Paper No. #, Available at SSRN: or

Roberta Romano (Contact Author)

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