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The State Competition Debate in Corporate Law, 8 Cardozo Law Review 709 (1987)


A perennial issue in corporate law reform is the desirability of a
federal system. For notwithstanding the invasive growth of regulation
by the national government, principally through the federal securities
laws, corporate law is still the domain of the states. While no
two corporation codes are identical, there is substantial uniformity
across the states. Provisions typically spread in a discernible S-shaped
pattern, as one state amends its code in response to another state's
innovation. The revision process is often analogized in the academic
literature to market competition, in which states compete to provide
firms with a product, corporate charters, in order to obtain franchise
tax revenues. This characterization is the centerpiece of the federalism
debate in corporate law-whether competition, and hence a federal
system, benefits shareholders. The hero-or culprit-in the
debate is Delaware, the most successful state in the market for corporate

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