Economics and Politics of International Investment Agreements

Abstract

The Robert Schuman Centre for Advanced Studies (RSCAS), created in 1992 and directed by Professor Brigid Laffan, aims to develop inter-disciplinary and comparative research and to promote work on the major issues facing the process of integration and European society. The Centre is home to a large post-doctoral programme and hosts major research programmes and projects, and a range of working groups and ad hoc initiatives. The research agenda is organised around a set of core themes and is continuously evolving, reflecting the changing agenda of European integration and the expanding membership of the European Union.

Regulatory chill and the effect of investor state dispute settlements

“…In Konrad () an ideal ISDS system levels the playing field for domestic firms and foreign investors by overcoming a policy failure caused by time inconsistency, but at the same time aggravates an overinvestment problem. Like this paper, Horn and Tangeras () analyze regulatory chill and show that there is underregulation from a national but not from a world perspective. Unlike the present paper, they analyze a situation of complete information and focus on the optimal design of compensation rules when countries have (dis)similar abilities to commit to their promises to foreign investors…”

“…National treatment creates an entry distortion for domestic firms but may welfare dominate ISDS if the share of domestic firms is large enough. Stähler (), Horn and Tangeras (), as well as Konrad () analyze optimal ISDS and compensation mechanisms. In Konrad () an ideal ISDS system levels the playing field for domestic firms and foreign investors by overcoming a policy failure caused by time inconsistency, but at the same time aggravates an overinvestment problem.…”

Investor-State vs. State-State Dispute Settlement

“…1 0 See the contributions by e.g. Janeba (2016), Kohler and Stähler (2016), Konrad (2017), Schjelderup and Stähler (2016), and Horn and Tangerås (2017).…”

Large investors, regulatory taking and investor-state dispute settlement

“…15 Marginal changes in k D a¤ect the expected payo¤ in a continuous fashion, and k D has strategic value because it a¤ects regulatory policy . 16 Using the de…nition (1), the assumption (2) and a > 5=4, and the results (12), (13), (14) and (15) we note that the objective functions are strictly concave . Maximization of D for this parametric case yields.…”

“…Moreover, the complementarity in the …rms' investment behavior may cause multiple equilibria: some in which …rms believe that all other …rms invest much, and some in which all …rms believe that all other …rms invest little. 16 In many contexts the government may regulate …rms more gradually, charging a Pigovian tax per unit of output that measures an external cost per unit of output. It can be shown that a strategic investment incentive arises in this case as well if the Pigovian tax rate itself depends on the level of investment k D .…”