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The Economics of Investor Protection: ISDS versus National Treatment

SSRN, ISSN: 1556-5068
2019
  • 6
    Citations
  • 1,637
    Usage
  • 1
    Captures
  • 0
    Mentions
  • 0
    Social Media
Metric Options:   Counts1 Year3 Year

Metrics Details

  • Citations
    6
    • Citation Indexes
      6
  • Usage
    1,637
    • Abstract Views
      1,397
    • Downloads
      240
  • Captures
    1
    • Exports-Saves
      1
      • SSRN
        1
  • Ratings
    • Download Rank
      255,456

Article Description

Investor-state dispute settlements (ISDS) are supposed to protect foreign investors against domestic policies causing “unjustified” harm. This paper scrutinizes the effects of investor-state dispute settlements (ISDS) and national treatment provisions in a two-period model where foreign investment is subject to domestic regulation and a holdup problem. It shows that ISDS can mitigate the holdup problem and increases aggregate welfare, but comes with additional regulatory distortions for the first period. A national treatment provision avoids these regulatory distortions, but implies entry distortions because it makes the holdup problem also apply to domestic firms. If the domestic regulatory framework applies to many domestic firms, a national treatment provision welfare-dominates ISDS.

Bibliographic Details

Wilhelm K. Kohler; Frank Stähler

Elsevier BV

Multidisciplinary; investor-state dispute settlement; national treatment provision; foreign direct investment; TTIP; TPP; regulation

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