DP4123 A Strategic Interpretation of Legal Transplants

Author(s):	Nuno Garoupa, Anthony Ogus
Publication Date:	November 2003
Keyword(s):	game theory, harmonization, K00, legal transplant
JEL(s):	C70
Programme Areas:	Public Economics
Link to this Page:	cepr.org/active/publications/discussion_papers/dp.php?dpno=4123

In this Paper we provide a strategic explanation for the spontaneous convergence of legal rules, which nevertheless falls short of harmonization across jurisdictions. We identify a free-riding problem and discuss its implications for legal culture, integration, and harmonization. It is argued that harmonization of legal rules by a central authority in order to generate a uniform legal culture could be the response to a coordination failure. It could also be a serious policy mistake, however, leaving everybody worse off. The result depends crucially on the relative benefits and costs of importing and integrating different legal orders.