22. Pierre-Hugues Verdier, Regulatory Networks and their Limits, 9/2008.
Abstract: In recent years, the rise of transgovernmental 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 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 in cases where state interests converge. However, when faced with more difficult regulatory issues where the choice of a specific policy has distributive implications, or where participating states have incentives to defect from common standards, TRNs are unlikely to succeed. 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. The article then analyzes three of the most salient examples of TRNs—in international securities regulation, banking and antitrust—and shows that the institutional weaknesses inherent in TRNs have limited the effectiveness of regulatory cooperation in these areas. It concludes that the more ambitious claims of TRN advocates are exaggerated, and that TRNs may exhaust their potential as they successfully address less contentious issues and increasingly face distributive and enforcement problems they are ill-equipped to resolve.