Corporations as Private Regulators

Abstract

The growing trend of corporations imposing restrictions on suppliers, contractors, and customers beyond the requirements of existing laws requires rethinking the nature and impact of corporations’ private regulatory power. This trend, which this Article refers to as “Corporations as Private Regulators” (CPR), represents a paradigmatic shift in how corporations participate in the making of public policies. This Article conceptualizes the corporate CPR power as the exercise of a right of refusal to deal with counterparties. This right of refusal could be theorized as a new form of property right, whose allocation has important implications for both rights and wealth. The Article further explores the possible legal responses to CPR under various approaches, including the status quo approach, the ad hoc approach, the antitrust approach, the general CPR law approach, the property approach, and the constitutional approach. Finally, the Article analyzes the advantages and disadvantages, as well as the theoretical and practical implications, of each approach. The insights garnered through these inquiries lay the foundation for systematically tackling the CPR power.