Eric writes:

Regulatory arbitrage is an Important concept, as well as a great phrase. The writer is square in the middle of the mainstream in the business world, and note how effortlessly he speaks of avoiding governments and playing them off against each other.

I'm not surprised, though my perspective has perhaps been enhanced by growing up in the land of the Delaware Corporation - part of the advantage of Delaware was that corporate taxes were low, but additionally the regulatory climate was friendly and there was almost 200 years of corporate relationships with the local government, so most disputes could be expected to be resolved reasonably fairly. It seems that business, like the net, regards censorship and other interference as damage, and routes around it....

Arbitrage of regulation almost always leads to equalization, although the time scales are much longer. When equalization happens, it's almost never that the advantage decreases for the destination buyer.

No surprise here - as transportation and communication improve, it becomes easier for buyers to buy things anywhere, from anyone, and the pool of available suppliers increases. And buyers are stuck with their local regulatory stupidity, but they can shop around for sellers with less stupid regulations. Meanwhile, the leverage of sellers with government-supported monopoly markets is decreased, because their local markets are less captive, and foreign markets aren't forced to buy from them; it becomes increasingly to their advantage to leverage on their current size to outcompete external competition while decreasing instead of increasing regulations on their businesses. Sometimes the only way to level the playing field is to get rid of the walls you built around it.... Bill