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Convergence of Legal Rules: Comparing Cooperative and Non-Cooperative Processes

  • Bertrand Crettez , Bruno Deffains EMAIL logo and Olivier Musy
Published/Copyright: November 24, 2015
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Review of Law & Economics
From the journal Review of Law & Economics Volume 12 Issue 1

Abstract

Legal scholars distinguish two modes of international legal cooperation: minimum legal harmonization and full harmonization (i.e. legal unification). These cooperative choices imply more or less stringent requirements and are opposed to non cooperative, unilateral legal changes. This paper is an attempt to model these alternative modes of legal adjustments and to compare their properties regarding legal convergence. We show that all arrangements can lead to legal uniformity. We also show that decentralized processes can be better than more centralized arrangements.

Keywords: law-and-economics; legal competition; legal transplants; legal harmonization; legal unification
JEL: C72-K00

Acknowledgment

We warmly thank a referee for constructive and helpful comments on a previous version of this work.

Appendix

Study of the minimum harmonization equilibrium in the mixed absolute-value-quadratic case

One can check that the maximum of:

−2|xt1−xt2|−θ2(xt1−xt−11)2−θ2(xt2−xt−12)2−ψh2xt−12−xt−11−xt2+xt12,

under the constraint xt1≥xt2 (and xt−11≤xt−12) is reached when:

xt1=xt2=x=xt−11+xt−122.

Now, it is also easy to see that the maximum of:

−2|xt1−xt2|−θ2(xt1−xt−11)2−θ2(xt2−xt−12)2−ψh2xt−12−xt−11−xt2+xt12,

under the constraint xt2≥xt1 is reached at:

xt1=xt2=x=xt−11+xt−122,

when xt−12−xt−11≤4/(θ+2ψh), and at:

xt1=2θ+2ψh+xt−11,
xt2=−2θ+2ψh+xt−12,

otherwise. Equation [12] follows then easily.

Proof of Proposition 2

Proof

Let us define λ≡xt−12−xt−11.

Let us first assume that 8θ+2ψu≤λ. In that case Utnc=−λ+32θ, Uth=−λ+2θ+2ψh and Utu=−λ. Then, the non-cooperative solution is preferred to minimum harmonization if, and only if:

[21]−λ+32θ>−λ+2θ+2ψh ⟺ θ6<ψh.

This inequality is true by assumption. The, we readily check that noncooperation is always chosen.

Next let us assume that λ∈42+ψh,8θ+2ψu. Then Utnc=−λ+32θ, Uth=−λ+2(θ+2ψh) and Utu=−(θ+2ψu)8λ2.

Legal unification is preferred to non-cooperation when the polynomial P(λ)=−(θ+2ψu8)λ2+λ−32θ where λ≡xt−12−xt−11. This polynomial takes positive values if, and only if ψu<θ6. By assumption this is impossible. Therefore, legal noncooperation is always preferred to legal unification. We can readily check that noncooperation is preferred to minimum harmonization. We then conclude that noncooperation is always preferred to the other legal arrangements.

Third, let us assume that λ∈2θ,4θ+2ψh. Then Utnc=−λ+32θ, Uth=−(θ+2ψh)8λ2 and Utu=−(θ+2ψu)8λ2.

By the same reasoning as in the preceding case, we can show that noncooperation is preferred to legal unification. Moreover, since minimum harmonization is always dominated by legal unification, again, noncooperation is always chosen.

Finally, it is easy to see that when λ≤2θ, noncooperation is never dominated by the two modes of legal cooperation.□

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Published Online: 2015-11-24
Published in Print: 2016-3-1

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https://doi.org/10.1515/rle-2014-0016
Keywords for this article
law-and-economics; legal competition; legal transplants; legal harmonization; legal unification

Articles in the same Issue

  1. Frontmatter
  3. Becker, Coase, Tullock and Manne: A Personal Tribute
  4. Convergence of Legal Rules: Comparing Cooperative and Non-Cooperative Processes
  5. Causal Apportionment of Tort Liability: An Efficient Approach
  6. The Effect on Lawyers Income of Gender Information Contained in First Names
  7. An Economic Assessment of Criminal Behaviour
  8. The 2007 Judicial Reform and Court Performance in Egypt
  9. Entrepreneurship and the Legal Form of Businesses: The Role of Differences in Beliefs
  10. How Accurately Can Convertibles be Classified as Debt or Equity for Tax Purposes? Evidence from Australia
  11. Constitutional Commitment to Social Security and Welfare Policy
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