Title

The Paradox of Legal Harmonization

Publication

Public Choice

Volume

132

Page

367

Year

2007

Abstract

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.

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