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Mutual Recognition Revisited: Misunderstandings, Inconsistencies, and a Suggested Reinterpretation

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  • Wolfgang Kerber
  • Roger Van den Bergh

Abstract

The principle of mutual recognition is almost universally acclaimed for removing barriers to trade, for enabling regulatory competition, and for preserving scope for regulatory autonomy instead of embarking on a path to harmonisation and centralisation. By using economic theories of legal federalism and regulatory competition, this paper shows that mutual recognition leads to a number of inconsistencies, which question its suitability as a conflict of law rule that guarantees a stable allocation of regulatory powers within a two-level system of regulations. Mutual recognition should be understood more as a dynamic principle, which triggers a reallocation of regulatory powers between different jurisdictional levels. It leads either back to the country of destination principle, to a free market for regulations, or to harmonisation. The European experience suggests that a regime of mutual recognition is primarily another path to convergence and harmonisation, instead of being an instrument that preserves decentralised regulatory powers or even regulatory competition. The welfare gains from achieving market integration should be balanced against the welfare losses of an inefficient allocation of regulatory powers. Copyright 2008 The Authors. Journal compilation 2008 Blackwell Publishing Ltd.

Suggested Citation

  • Wolfgang Kerber & Roger Van den Bergh, 2008. "Mutual Recognition Revisited: Misunderstandings, Inconsistencies, and a Suggested Reinterpretation," Kyklos, Wiley Blackwell, vol. 61(3), pages 447-465, August.
  • Handle: RePEc:bla:kyklos:v:61:y:2008:i:3:p:447-465
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    References listed on IDEAS

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    Cited by:

    1. Bianka Dettmer, 2012. "The European Union's service directive: Contrasting ex ante estimates with empirical evidence," Jena Economic Research Papers 2012-019, Friedrich-Schiller-University Jena.

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