foreign counterparts – generally though the threat of market exclusion – is a key determinant of
the likelihood of success.
If domestic regulatory authority is fairly decentralized, in contrast, it is unlikely that any
particular actor involved in domestic market regulation can leverage market access in pursuit of
higher regulatory standards abroad. In such instances, a mechanism must be found to coordinate
disparate actors and to project regulatory authority externally. Such coordination has to be
provided on a high level of government, presumably through cabinet level trade, commerce, or
foreign affairs authorities. Coordinating and externally projecting decentralized regulatory
authority on the cabinet level, in turn, sets regulatory cooperation in the industry on an interstate
trajectory.
Let me briefly summarize the hypotheses just derived from the model:
International regulatory cooperation in an industry is triggered when market interpenetration
leads to an incongruence of market scope and the reach of regulatory authority;
Regulators from large markets with the highest regulatory standards take the lead in seeking
an international regulatory regime;
Power in ensuing negotiations is a function of transnational market share and the extent of
regulatory capacity over that share of the market;
Leveraging market access is an effective way to shift the “reversion point” for international
regulatory bargaining;
The policy objectives and principles upon which the lead regulator’s domestic regulatory
regime rests inform the initial substantive agenda for international cooperation;
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Convention