Verdier: Transnational Regulatory Networks and Their Limits

Pierre-Hugues Verdier (Boston Univ. - Law) has posted Transnational Regulatory Networks and Their Limits (Yale Journal of International Law, forthcoming). Here's the abstract:

In recent years, the rise of transnational regulatory networks (TRNs) has attracted the attention of international law scholars. Advocates of TRNs contend that, by cooperating directly with their counterparts abroad to address common regulatory issues, national regulators are creating a revolutionary system of effective global governance without centralized world government. This Article advocates for a more cautious approach to this phenomenon. Based on a theoretical analysis of TRNs, it argues that they may be successful in overcoming relatively simple problems of international regulatory coordination where state interests converge. However, TRNs are less likely to succeed when faced with more difficult regulatory issues where, for example, the choice of a specific policy has distributive implications or states have incentives to defect from common standards. In such cases, their effectiveness is undermined by the numerous domestic legal and political constraints faced by national regulators and by the institutional incapacity of TRNs to monitor or enforce the rules they adopt. To support this theory, this Article analyzes three TRNs-in international securities regulation, banking, and antitrust-widely seen as successful, and shows how the institutional weaknesses inherent in TRNs have limited their effectiveness. It concludes that ambitious claims regarding the transformative potential of TRNs are overly optimistic, and that future scholarship on TRNs should be more sensitive to the political aspects of international regulatory cooperation and the intrinsic limitations of informal governance structures.