International Games With National Rules: How Regulation Shapes Competition in ‘Global’ Markets

In the most global of industries, such as telecommunications and finance, international competition remains governed primarily by national regulations. When multiple national regulators govern international markets, the regulators themselves compete. But do they compete in laxity, trying to reduce regulation as much as possible, or do they compete in regulatory subsidy, trying to rig regulations to favor domestic firms? These questions are examined in Britain and Japan. In telecommunications and finance there has been no single global trend toward regulatory laxity or regulatory subsidy; national regulations still set the terms for international competition; the game of regulatory competition is so complex that it is difficult to find any single strategy for winning; and national authorities will continue to have difficulty in shifting regulation to the international level.