Working Paper: CEPR ID: DP4123
Authors: Nuno Garoupa; Anthony Ogus
Abstract: In this Paper we provide a strategic explanation for the spontaneous convergence of legal rules, which nevertheless falls short of harmonization across jurisdictions. We identify a free-riding problem and discuss its implications for legal culture, integration, and harmonization. It is argued that harmonization of legal rules by a central authority in order to generate a uniform legal culture could be the response to a coordination failure. It could also be a serious policy mistake, however, leaving everybody worse off. The result depends crucially on the relative benefits and costs of importing and integrating different legal orders.
Keywords: Game Theory; Harmonization; Legal Transplant
JEL Codes: C70; K00
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| interaction of jurisdictions (H73) | varied legal cultures (K15) |
| willingness to adjust legal rules (K40) | convention effect (F55) |
| one jurisdiction willing to adjust legal rules + other not willing to adjust (K49) | transplant effect (F24) |
| neither jurisdiction willing to adjust (K49) | payoff of zero (G19) |
| costs associated with changing legal rules (l) (K20) | outcome of interactions (F55) |
| lower costs of adjustment (F32) | higher chances of convergence (C62) |
| harmonization imposed by central authority (F02) | alleviate or exacerbate issues (F35) |
| coordination problem + associated costs (D23) | convergence or distinct legal cultures (K15) |
| dynamics of legal change (K40) | influenced by economic factors and characteristics of legal systems (K40) |