A Law and Economics Analysis of the European Takeover Directive: What about Enforcement?
Published at: Oxford Business Law Blog
A vast literature studies the role of institutions, such as regulation, for economic outcomes. An implicit assumption in many theoretical and empirical studies in the field is that the law is perfectly enforceable. However, in practice, most of the time this is not the case. The law may not be perfectly enforceable for several reasons. One reason is that enforcers may be capacity-constrained and therefore cannot prosecute each case. Another reason is that the costs of enforcement are too high to motivate economic agents to insist on their rights. There is another ‘European-specific’ reason for imperfect enforcement: European member states, which are obliged to transpose EU-level directives into national laws, often have considerable discretion over the design and scope of their enforcing bodies within their jurisdictions, which they may use to conserve or increase their competitive advantage. Read more