Commentary on Sitkoff

Abstract

Building on McChesney's political extortion model of rent extraction,1 Rob Sitkoff offers new, innovative contributions to the literature on corporate political speech.2 This Commentary addresses only one segment of Sitkoffs Article, the one that applies McChesney's theory to the debate on the efficiency of the market for corporate charters.3 The main goal of this Commentary is to clarify Sitkoffs argument and examine its limits. I begin with a short introduction on the economics of regulation, which I believe is essential to understanding Sitkoffs Article as well as this Commentary. The next three parts of my Commentary examine Sitkoff s main claim, namely, that Delaware's dominance in the market for corporate law may be explained by the weak extortion power that Delaware's legislators hold vis-a-vis corporations and by its liberal campaign finance laws. I conclude with an analysis of Sitkoff's objection to federal corporate law and, in particular, to Bebchuk and Ferrell's call for an optional federal takeover law.