Internal Market Regulation Research Articles

The Behavioural Law and Economics of the Precautionary Principle in Artegodan and Its Impact on EU Internal Market Regulation

The Behavioural Law and Economics of the Precautionary Principle in Artegodan and Its Impact on EU Internal Market Regulation

Homo Economicus, Behavioural Sciences, and Economic Regulation: On the Concept of Man in Internal Market Regulation and Its Normative Basis

In the following paper we investigate how EU law conceptualizes the individual to whom internal market regulation is addressed. To this end, we take as an analytical point of departure a stylized information paradigm, whereby for reasons of internal market benefits, market players have to bear the burden of perceiving and processing information that is relevant in respect of an intended transaction, as well as disadvantages should they be ill-equipped to cope with this assignment. We will show that although it implemented the normative concept of a well-informed, observant and circumspect consumer, the ECJ never adopted such a stylized information paradigm. Moreover, we illustrate through various examples how the EU legislature assists market players in perceiving and processing information, and even seeks to steer their decision-making process. We reconsider whether or to what extent this should be understood as an advancement of an information paradigm or rather as a “behavioural turn.” We argue that only a differentiated approach that balances the internal market rationale with potentially conflicting rights meets the exigencies of EU law.

Governing lipitor and lipstick: Capacity, sequencing, and power in international pharmaceutical and cosmetics regulation

ABSTRACT Over the last three decades, the pharmaceutical and cosmetics industries have become increasingly global. To ensure product safety and consumer protection, regulators in leading markets have applied domestic rules extraterritorially and have joined forces to harmonize rules through transgovernmental cooperation. Yet whereas the United States has long been the dominant player in international market regulation of pharmaceuticals, the European Union has decisively shaped global rules for cosmetics. What explains differences in agenda setting power across the two closely-related industries? We compare and contrast the expectations of a realist account focused on market size and a liberal functionalist argument centered on the role of market friction with a historical institutionalist explanation stressing the relative sequential development over time of domestic regulatory capacity in leading markets. The empirical evidence shows that domestic regulatory institutions systematically shape international market regulation. Historical institutionalism provides an important complement to existing transgovernmental research, offering clear expectations for the origins of and terms of influence within such cooperation. More generally, it opens up a rich toolbox for the analysis of industry-level global market governance, which affects the daily lives of many millions of consumers.

The rise and rule of a trade-based strategy: Historical institutionalism and the international regulation of intellectual property

ABSTRACT One of the most dramatic instances of international market regulation in the twentieth century was the adoption of a multilateral, enforceable, intellectual property protection regime at the end of the Uruguay Round of trade negotiations in 1994. The Agreement on Trade-Related Aspects of Intellectual Property (TRIPS) ushered in a new era of high standards of intellectual property protection, requiring profound and costly domestic institutional changes in many, many countries. International market regulation has increasingly penetrated domestic regulatory environments in ways that have compromised domestic political bargains. Historical institutionalism can help to explain the emergence of a global regime for intellectual property protection as a product of institutional change in the US. Historical institutionalism provides a lens to examine the directly political (rather than technocratic or efficiency maximizing) processes establishing domestic and international power relations.

Is historical institutionalism bunk?

Click to increase image sizeClick to decrease image size ACKNOWLEDGEMENTS I am grateful to Mark Blyth, Henry Farrell, and Abe Newman for their bountiful patience. Notes 1 I would not characterize my approach as unfriendly to historical institutionalism. I explicitly rely on HI scholarship to articulate national preferences over regulatory standards (Drezner, 2007 Drezner, D. W. 2007. All Politics is Global: Explaining International Regulatory Regimes, Princeton, NJ: Princeton University Press. [Google Scholar]: 41–43). My revisionist approach parts ways with HI in thinking of regulatory institutions as an independent source of state power. 2 It should be noted, however, that there is not a lot of institutional politics to this resistance. While Mosley cites the embeddedness of financial interests into the political system, either a pluralist account (Frieden, 1991 Frieden, J. 1991. Invested Interests: The Politics of National Economic Policies in a World of Global Finance. International Organization, 45: 425–51. [Crossref], [Web of Science ®] , [Google Scholar]) or an argument about the structural dependence of the state on capital (Przeworski and Wallerstein, 1988 Przeworski, A. and Wallerstein, M. 1988. Structural Dependence of the State on Capital. American Political Science Review, 82: 11–29. [Crossref], [Web of Science ®] , [Google Scholar]; Johnson 2009 Johnson, S. 2009. The Quiet Coup. The Atlantic, May [Google Scholar]) would have provided a similar prediction. 3 The omnipresence of the European Union in this special issue is another potential source of concern about the explanatory domain of the historical institutionalist approach. It would be useful in future work to see HI scholarship focus more on emerging markets – as will be discussed below. 4 Susan Sell's essay in this issue is agnostic on the question of regulatory capacity, but her extant work on intellectual property rights suggests that both unembedded domestic actors and states with weak regulatory capacities can still have profound effects on international market regulation (Sell, 2003 Sell, S. 2003. Private Power, Public Law: The Globalization of Intellectual Property Rights, Cambridge: Cambridge University Press. [Crossref] , [Google Scholar]; Prakash and Sell, 2004 Prakash, A. and Sell, S. 2004. Using Ideas Strategically: The Contest Between Business and NGO Networks in Intellectual Property Rights. International Studies Quarterly, 48: 143–175. [Crossref] , [Google Scholar]). 5 Quoted in Tobias Buck, “EU Wants Rest of World to Adopt Its Rules,” Financial Times, February 18, 2007. 6 This is not inconsistent with a market power approach either. China's market size is growing, but remains appreciably smaller than either the United States or the European Union (Brooks and Wohlforth, 2008 Brooks, S. and Wohlforth, W. 2008. World Out of Balance, Princeton, NJ: Princeton University Press. [Crossref] , [Google Scholar]). 7 Gardiner Harris, “Journal Retracts 1998 Paper Linking Autism to Vaccines,” New York Times, February 2, 2010.

Making global markets: Historical institutionalism in international political economy

ABSTRACT As dramatically evidenced by the global financial crisis, the interaction of domestic regulatory systems has significant international consequences. Nevertheless, these relationships have received only limited attention from international relations scholars. This special issue, therefore, provides a detailed examination of international market regulation – the processes through which the domestic regulatory activities of states and other actors set the effective rules of internationally-exposed markets. To this end, we borrow and extend on arguments developed by historical institutionalists in comparative politics and American political development. In particular, the contributions adapt two mechanisms – policy feedbacks and relative sequencing – to explain state and bureaucratic preferences over international market regulation as well as bargaining strength in relevant negotiations. In addition to contributing to central IPE debates about international economic governance, the individual contributions shed light on a number of important empirical domains such as corporate accounting, intellectual property, pharmaceuticals, hedge funds, and financial market standardization.

Capitalist diversity and the international regulation of hedge funds

ABSTRACT After years of acrimonious debate among leading industrialized states, the G20 reached an agreement in 2009 on the regulation of hedge funds. Anchored in an institutional theory of government action that draws on historical institutionalism, this article finds that cleavages between liberal market economies (US, Britain) and organized market economies (Germany, France) determined the failure to regulate hedge funds in the 1990s, the origins of a self-governance regime in the mid-2000s, as well as the nature of the G20 agreement in 2009. Historical institutionalism offers an important complement to theoretical traditions in international political economy (IPE) that stress the role of states’ market power in shaping international regulatory regimes, especially in accounting for how the evolution of state preferences affect the nature of international regulation over time. The article concludes with suggestions for how historical institutionalism can be extended beyond its typical purview in comparative politics to give analytical and substantive nuance to the study of international market regulation.

Cómo escapar de la trampa de la credibilidad política: el nuevo debate sobre la arquitectura financiera internacional

Durante la última década, los políticos latinoamericanos —sobre todo los argentinos— han buscado la credibilidad política ante los mercados financieros internacionales. Esto ha llevado a crear políticas de tasas de cambio fijas y de apertura de capital, y ahora se está promoviendo la dolarización de las economías. Podemos decir —a su favor—, que estas políticas han ayudado a detener la inflación y recuperar el orden fiscal. Sin embargo, también han sido muy costosas en términos de desempleo, distribución del ingreso y seguridad laboral; también han reducido las posibilidades de autonomía política nacional, han generado una búsqueda excesivamente celosa de equilibrio fiscal y han promovido condiciones de vulnerabilidad financiera. Tal y como se la concibe actualmente, la búsqueda de credibilidad política ha resultado ser una trampa, para escapar de ella es necesario introducir nuevas regulaciones a los mercados financieros nacionales e internacionales, con el fin de conservar el dinamismo de los mercados sin perder espacio para la autonomía política nacional.

WHAT ATTRACTS FOREIGN DIRECT INVESTMENT: A CLOSER LOOK

It is rational to assume that minimal trade barriers (tariffs and quotas), a bigger trade sector, lower interest rate regulations, freer international capital market, lower credit and labour market regulations will make investment in a country more lucrative for foreign investors. We confirm this and show the prevalence of non‐linearity in the relationships.

Changing visions of the world sugar market in the Great Depression1

The interwar period is usually characterised as a prime example of disintegration and national antagonism, and even claimed by some to be the ‘end of globalisation’. This article shows, however, that first attempts towards an economic internationalism were possible and implemented. It argues that a changing vision of the world provided the basis for this new tendency. The irreversibility of the interconnectedness of the national economies became obvious in spite of an end of globalisation as mirrored by the decline in international trade. This shift in the vision of the economic world is described for the case of the international sugar market. Driven by the Great Depression, the sugar industries of the main European sugar exporting countries concluded a private ‘gentlemen's agreement’ with the main producers of sugar cane, Cuba and Java. This innovative measure of international market regulation together with the change in the vision of the world sugar market laid the foundation for the international negotiations of sugar politics after the Second World War.

Governing Lipitor and Listerine: The Domestic Roots of International Pharmaceutical and Cosmetics Regulation

Technical standards and product regulations increasingly shape international trade patterns, the organization of cross-national production, and global investment flows. This paper examines the evolution of international market regulation in the pharmaceutical - and cosmetics industries over the past three decades. International market regulation of pharmaceuticals and cosmetics poses an intriguing empirical puzzle. Both industries have seen the emergence and subsequent institutionalization of international market regulation over the last three decades. In similar ways, the mode of international governance has shifted over time in both cases - from occasional international spill-over of domestic rules to deliberate extraterritorial imposition of domestic laws to trans-governmental cooperation aimed at international harmonization. Yet against this background of commonality, we find a sharp divergence in the sectors when it comes to who exerts most influence: in the case of pharmaceuticals, the United States has long been dominant and has only recently seen its leadership challenged by the European Union; in cosmetics, by contrast, the EU has shaped international market regulation from the outset and the US has failed, repeatedly, to make significant inroads. What explains the similar institutional evolution of international market regulation in the two fields and the sharp divergence in terms of policy influence between them?

Even Giants Need a Club: Domestic Institutions, Market Size, and Regulatory Influence

In this paper we show that work on international market regulation has paid insufficient attention to the critical role played by domestic political and regulatory institutions. Existing literature emphasizes the role of market power, determined by market size, in analyzing international regulatory influence. While we do not contest the importance of market power, we introduce the notion of domestic regulatory capacity to capture the domestic institutional side of international market regulation that previous work has sidestepped. Domestic regulatory capacity is the missing link between latent market power vested in market size and international influence activated through regulatory institutions. The article employs the market size argument as a null hypothesis and contrasts it with a specification of market power that includes domestic regulatory capacity alongside market size. The two perspectives are evaluated in a structured, focused case comparison of international regulatory dynamics in the financial securities and personal data fields.

Inter-Industry Wage Differentials: What Do We Know?

Substantial wage differentials are observed in all countries between workers employed in different sectors. How can we explain these wage differentials? Do they entirely derive from the sectoral diversity in personal productive characteristics and task descriptions or do employer features also play a role? Are inter-industry wage differentials smaller in countries with centralised and coordinated collective bargaining? Are they shaped by international trade and product market regulations? What is their impact on gender and other types of inequality? Do they affect economic performance? These are the main questions that we address in this review of the literature.JEL Code: J31.

The Fair Trade Network in Historical Perspective

ABSTRACT This paper examines the fair trade network within the context of the post-war international development regime. In recent years, sales of fair trade goods—both commodities and handicrafts—have grown substantially in Europe and North America, and the fair trade network has been relatively successful at gaining the support of public institutions, international financial institutions, and transnational corporations. This paper argues that this success, when viewed historically, can only be properly understood as the flip side of the defeat of the broader fair trade movement that sought international market regulation and strong state intervention and is in fact indicative of the current triumph of neoliberal globalization.

Better internal market regulation

Better internal market regulation

International Telecommunications Market Regulation

On 23 August 1999, the Productivity Commission reported to the Australian Government on international telecommunications market regulation. The report focused on the reform of international telecommunications markets, in particular on the payment arrangements between providers of international telecommunications services.

Liquidity vs. Efficiency in Liberalized International Financial Markets: a Warning to Developing Economies

ABSTRACT Until 1973 the postwar international payments system was, in large measure, shaped by Keynes’s thesis that flexible exchange rates and free international capital mobility are incompatible with global full employment and rapid economic growth in an era of multilateral free trade (Felix, 1977-8). This resulted in a stable international monetary system that permitted the global economy to experience unparalleled economic growth and prosperity despite widespread capital controls and international financial market regulations. Since 1973, the financial system has grown progressively more fragile with recurrent and increasingly stressful international debt and currency liquidity crises threatening the stability of the global economy.

Compliance to HACCP and competitiveness of Oman fish processing

Exports of fish products are very important for the Sultanate of Oman to diversify sources of income and achieve higher standards of living to fishermen. In the past government regulations and support were sufficient to reach markets such as the European Union and the United States. During the last decade, however, there has been more focus on the application of more stringent quality regulations according to international norms namely Hazard Analysis Critical Control Point (HACCP). This paper investigates the perception and compliance of Oman fish companies to HACCP and consequences for corporate success and competitiveness. The paper provides and overview of international and national fish market regulations and the development of seafood regulations in Oman. It also develops an empirical framework to investigate empirically the relation between the adoption of international quality control procedures and success in export markets using an export penetration index. The paper findings show that up to 1998, Oman fish quality regulations differ in scope and objectives from HACCP. For instance, there is no requirement of plant-level quality management system equivalent to HACCP. Also, Oman regulations were based on regular inspections by government agents whereas HACCP is a system-based approach aiming at reducing repeated inspections. Empirical results support the hypothesis put forward; variables reflecting on the quality of fish products, that is, HACCP and sanitation were found to be positively correlated to the export index.

Regulatory competition and international co-operation

Recent research has shown that regulatory competition does not necessarily lead to downward pressures on regulation, but may at times also push the level of regulation upwards. Extending David Vogel's 'California effect' argument, this article shows that such upward pressure may not only result directly from the dynamics of the competitive process but also from international co-operation. Evidence from two case studies on international capital market regulation is used to identify the conditions under which co-operation in the shadow of regulatory competition is likely to succeed or fail. The successful multilateral standardization of banking capital requirements in the BIS is compared to failed attempts to harmonize interest taxation across EC member states.

Reviews: Spatial Formations, Housing Policy in Britain and Europe, the Flexible Economy: Causes and Consequences of the Adaptability of National Economies, the SOAS/GRC Geopolitics Series 4. Transcaucasian Boundaries, China: Internal Market Development and Regulation, Ireland in the Twentieth Century: Divided Island, toward an Environmental Strategy for Asia, Rapid Urban Environmental Assessment: Lessons from Cities in the Developing World. Volume 2.

Reviews: Spatial Formations, Housing Policy in Britain and Europe, the Flexible Economy: Causes and Consequences of the Adaptability of National Economies, the SOAS/GRC Geopolitics Series 4. Transcaucasian Boundaries, China: Internal Market Development and Regulation, Ireland in the Twentieth Century: Divided Island, toward an Environmental Strategy for Asia, Rapid Urban Environmental Assessment: Lessons from Cities in the Developing World. Volume 2.