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Regulatory Takings and Environmental Regulation in NAFTA's Chapter 11 AgEcon
Aisbett, Emma; Karp, Larry S.; McAusland, Carol.
NAFTA's investment treaty has led to several expropriation compensation claims from investors hurt by new environmental regulations. Expropriation clauses in international treaties solve post-investment moral hazard problems such as hold-ups. However, these clauses can interact with National Treatment clauses in a manner that hinders investment. A police powers carve-out from the definition of expropriation can be Pareto-improving and can increase the level of foreign investment.
Tipo: Working or Discussion Paper Palavras-chave: Foreign direct investment; Regulatory takings; Expropriation; NAFTA; National Treatment; Environment; Environmental Economics and Policy; International Relations/Trade; K3; Q58; F21.
Ano: 2006 URL: http://purl.umn.edu/7195
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Police-powers, regulatory takings and the efficient compensation of domestic and foreign investors AgEcon
Aisbett, Emma; Karp, Larry S.; McAusland, Carol.
In customary international and public law, “takings” resulting from regulations designed to protect the public good are generally excluded from compensation rules; this exclusion is known as a police powers carve-out (PPCO). Increasingly, this PPCO is being challenged, particularly in international investment law. This paper analyzes the efficiency properties of a PPCO in a model with endogenous regulation, investment and entry. We design a one-parameter family of carve-out/compensation schemes that induce efficient regulation and firm level investment even when the regulator suffers fiscal illusion and the social benefit from regulation is private information to the regulator. We show that offering a carve-out reduces the subsidy to risky industry...
Tipo: Working or Discussion Paper Palavras-chave: Regulatory takings; Expropriation; Environment; Foreign direct investment; NAFTA; Environmental Economics and Policy; Research Methods/ Statistical Methods; F21; H4; K3; Q58.
Ano: 2008 URL: http://purl.umn.edu/42842
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