Henry N. Butler

Nineteenth-Century Jurisdictional Competition in the Granting of Corporate Privileges

century as state legislators relinquished their strict control over the power to grant or deny special corporate privileges to the particular groups that sought them. The corporate charter, which originated as an exclusive privilege to the few, by the end of the nineteenth century had become a general privilege available to all. The move from special charters by individual legislative act to general incorporation on compliance with simple and inexpensive procedures represents a major change in the structure of property rights. This paper offers a legal and economic account of the decline and fall of the special charter in the United States and seeks to explain how and why legislators abandoned the market for special charters. The paper proceeds as follows. Section I examines the ways in which the methods of legal and economic historians can be brought to bear on the basic question. Thereafter it advances the central thesis of the paper, that legislators abandoned the market for special charters only after

A Single-License Approach to Regulating Insurance

State regulation of insurance companies has been criticized for many years because of the burden imposed on insurers by having to comply with the laws of many jurisdictions. These higher costs are passed on to consumers. The problems with the current regulatory structure are prompting calls for increased federal regulation of insurance. However, all proposals to federalize insurance regulation create opportunities for abuse at the hands of the federal government and fail to utilize the benefits of a federal system. This article shows how many of the problems of the current system can be addressed without resorting to a large scale intrusion of federal regulators into insurance markets. The proposed solution calls for minimal federal intervention to provide for jurisdictional competition between states that would be allowed to charter insurers that could operate nationally with only the single license granted by the charter. This single-license approach addresses the most salient concerns of proponents of federal optional chartering. It also has the potential for triggering competition and innovation in insurance products and rates while preserving a meaningful role for state regulation.

Legal process for fostering innovation

This chapter shows that innovation depends at least as much on how laws are made as on a priori analyses of the optimal content of those laws. Legal process therefore is critical to the development of efficient policies for fostering innovation and growth. Of particular importance is whether the U.S. legal system promotes an efficient market for law. This analysis builds on central insights of Austrian economics and the role of institutions in supporting market processes. It shows how particular legal institutions can foster innovation by supporting a market for law.