Abstract
In this paper, we study the dynamics of legal rules in a model with two nation-states playing a non cooperative game. For each country, changing the legal system is a costly process. At the same time, the existence of different legal systems is also costly for all nation-states. We show that despite the non cooperative behavior of countries, a process of legal convergence is achieved in the long run through small step by step changes. This result depends neither on the number of players in the game, nor on the time horizon of policy makers. Complete legal convergence can be obtained in a finite time. Coordinated efforts to achieve legal convergence are then unnecessary. We show that they might even be counterproductive, in the sense that the welfare of nation-states is higher under legal competition, compared to cooperative legal unification.
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