Entry Barriers and Competitive Governance

Abstract

Existing arguments for competitive governance have for the most part considered the free movement of people among many jurisdictions as necessary and sufficient conditions for competition. This paper argues for the importance of entrepreneurial entry and suggests that barriers to entry should be seen as the primary impediment to robust and effective competition in the market for governance. Competitive entry allows for many policy and institutional ideas to be tested in parallel, leading to perpetual innovation in the market for governance. Low-cost entry also protects against the risks of centralization, collusion, and institutional inertia. This argument provides support for proposals aiming to create new jurisdictions or enable the creation of new non-territorial governance providers, as well as providing insight into the desirability and feasibility of each such proposal.