AN ECONOMIC ANALYSIS OF REGULATORY OVERLAP AND REGULATORY COMPETITION: THE EXPERIENCE OF INTERAGENCY REGULATORY COMPETITION IN CHINA'S REGULATION OF INBOUND FOREIGN INVESTMENT

• 成果类型: Article
• 署名作者: Li, Xingxing
• 署名单位: University of Chicago
• 刊物名称: ADMINISTRATIVE LAW REVIEW
• ISSN/ISSBN: 0001-8368
• 发表日期: 2015
• 页码: 685-750
• 关键词: jurisdictional competition; agencies; POLITICS; LAW; INFORMATION; DELAWARE; DESIGN

摘要

Regulatory competition theorists predict that interagency regulatory competition one. form of regulatory competition-may generate benefits that outweigh costs. However, this Article presents a case study on how complexities arising from the institutional setting and strategic behavior of regulatory agencies may undermine meaningful competition. The subject of the study is the domestic regulation of inbound foreign investment in China. The study uncovers how and why agencies' self-expansion behavior without proper external constraints, alongside the distorted incentive structures of regulatory agencies, makes the predictions of theorists not hold true in the context of China's regulation of foreign investment. It identifies one behavior pattern that has not been sufficiently addressed in previous literature: in interagency competition, Chinese agencies strategize to become additive-rather than alternative-to each other out of a rational cost-benefit calculation. This Article's economic analysis probes into the inefficiencies derived from such a behavior pattern. An emphasis on due delegation of authority, utilization of centralized coordination mechanisms, and installation of screening processes to avoid wasteful overlap up front, as well as adequate deterrent mechanisms to reshape agencies' incentive structures, may help mitigate the inefficiencies. Distinctions are drawn from select regulatory competition and regulatory overlap scenarios in the United States. The theoretical implications are as follows: (1) in order to design an efficient and effective regulatory competition framework tailored to specific legal and institutional frameworks, certain presumptions about regulatory competition need to be clarified or modified; (2) jurisdictional competition has implications distinct from interagency regulatory competition; (3) theoretical modeling sufficiently needs to factor in agencies' tendencies to expand bottom-up and their strategic behavior in an overlapping jurisdiction; (4) interagency regulatory competition in a law enforcement scheme may generate effects different from a permit-granting regime; (5) to achieve an optimal number of regulatory agencies within a regulatory domain, in lieu of abstaining from intervention and endorsing free competition analogous to private firms' competition in the marketplace, the principal should police and coordinate competition among regulatory agencies and curb the free entry by agencies into a regulatory regime.