Interjurisdictional competition and the allocation of constitutional rights: A research note

The advantages or disadvantages of interjurisdictional competition are a hotly discussed topic in institutional economics. While the academic discussion is often concerned with the properties of an institutional meta-frame to avoid a “race to the bottom” of taxes and regulatory standards, in this commentary a closer look is given to the “inner” constitution of jurisdictions that face interjurisdictional competition. With the help of club-theory and the new property rights theory of the firm it is argued that residual constitutional rights should be allocated to immobile individuals. An allocation of constitutional rights that makes a difference between mobile and immobile individuals helps to avoid certain problems of interjurisdictional competition that have yet to be solved from the perspective of an institutional meta-framework. Some new ideas on the deregulation of politics fit into the proposed logic.