Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/38970
Authors: 
Baniak, Andrzej
Grajzl, Peter
Year of Publication: 
2010
Series/Report no.: 
CESifo working paper Public Choice 3085
Abstract: 
We study the desirability of interventionist harmonization of legal standards across multiple, mutually interdependent jurisdictions which strive to adapt law to their local conditions as well as to synchronize it with other jurisdictions. In a setting where jurisdictions are privately informed about their local conditions, we contrast the regime of decentralized standard-setting with two means of interventionist harmonization: through centralization and through allocation of lawmaking authority to a particular jurisdiction. Our analysis illuminates the importance of patterns of interjurisdictional linkages in delineating the scope for, and the appropriate means of, interventionist harmonization. We find that greater jurisdictional interdependence - the hallmark of globalization - per se does not justify interventionist harmonization unless increased interdependence results in notable asymmetries in the pattern of jurisdictional interdependence. We also show that, in the presence of cross-jurisdictional externalities, harmonization is, contrary to conventional predictions, not desirable when local preferences are homogeneous across jurisdictions.
Subjects: 
harmonization
centralization
delegation
cross-jurisdictional externalities
jurisdictional interdependence
globalization
JEL: 
D02
D82
K40
P50
Document Type: 
Working Paper

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