Unilateral Corporate Regulation
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Corporations today wield unprecedented power in politics and society, and they have a tremendous effect on human welfare around the globe. At the same time, they are increasingly difficult to regulate. Corporations are savvy and mobile, and they can relocate to avoid burdensome domestic regulation with surprising ease. The agility of corporations creates a dilemma for government decisionmakers seeking to balance the need to attract the wealth that corporations create with the desire to pursue other policy priorities. One potential approach that governments have used to address this dilemma is international cooperation, and a growing number of scholars have argued that formal or informal agreements are necessary to solve many of the regulatory problems associated with corporate agility. This emphasis on multilateral solutions, however, obscures the extent to which countries, and in particular large economic powers, can and do unilaterally impose their domestic regulations on international firms. This Article argues that unilateral corporate regulation can solve, or at least mitigate, many of the global problems that government decisionmakers face. At the same time, a state’s assertion of unilateral regulatory authority in any particular issue area is costly and may reduce the effectiveness of regulation in other areas. More broadly, it is such a powerful tool that governments must proceed cautiously before engaging in it. The Article concludes by providing a framework for designing and implementing unilateral corporate regulation in such a way that improves policy outcomes and reduces unintended consequences.
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