The Paradox of Legal Harmonization
43 Pages Posted: 16 Dec 2005
The legal landscape is changing, adapting to the global market. Differences between legal systems hinder transnational commerce. Countries reduce legal differences through non-cooperative and cooperative adaptation processes that alternatively lead to legal transplantation or harmonization. Switching costs render unification difficult. Cooperation reduces differences to a greater extent but rarely leads to legal unification. In this paper we unveil a paradox of legal harmonization. When switching costs are endogenous, countries engaging in cooperative harmonization may end up with less harmonization than those pursuing non-cooperative strategies.
Keywords: legal harmonization, legal transplantation, transnational contracts, legal change
JEL Classification: K10, K33, D70
Suggested Citation: Suggested Citation