The Gravity of Legal Diffusion

A persistent empirical finding is that bilateral trade between two countries is proportional to the size of their economies and inversely proportional to their geographic distance. We hypothesize that a similar pattern is likely to hold for the diffusion of laws. We specifically argue that countries’ propensity to update their laws to converge with the leading regulator in a given policy area is likely to be proportional to the size of their economies and inversely proportional to their geographic distance. We then empirically test this theory in the area of antitrust and assess countries’ convergence to the world’s leading antitrust regulator: the European Union.

Using a modified gravity equation, we find that a country’s economic size is consistently positively correlated with continued legal convergence and that a county’s distance from the European Union is consistently negatively correlated with continued convergence. These results suggest that a modified gravity model may offer a simple model of legal diffusion that does not requiring strong epistemic and empirical assumptions.