Levelling the Field Through Transnational Regulation
Abstract: This paper identifies factors that may lead businesses to advocate for transnational regulation addressing business conduct. While businesses may initially resist such regulation, they may opt for it in situations of differential regulation that raises their costs relative to their peers. Transnational regulation offers them a means to reduce competitive losses by distributing compliance costs on to peers. Differential regulation is necessary but insufficient to result in corporate advocacy for an international agreement or other form of transnational regulation. Instead, other factors influence the strength or weakness of those preferences for transnational regulation, such as (a) extent of global footprint, (b) net gain or loss resulting from heightened compliance costs, (c) targets for regulatory change: (domestic, foreign, or global), d) pathways for regulatory change (private ordering, lobbying, and transnational), and (e) market participation rates. These factors explain business preferences for transnational regulation when that company is regulated in a jurisdiction that mandates a higher standard. It also explains that similar factors may also lead companies incorporated in unregulated jurisdictions to prefer transnational regulation when they adhere to a higher standard because of standardization drivers and susceptibility to private regulation.
