ABSTRACT

Extraterritorial regulation can have a "spillover" effect and cause friction between the regulating state and the affected state. To the extent the economic great powers are backed by market power, it can be argued that effective extraterritorial regulation tends to be a privilege of large countries. It may be the presence in the market of a foreign entity that could make it vulnerable to extraterritorial regulation. D. Bach and A. L. Newman argument focuses on regulatory influence in general and not on extraterritoriality in particular, highly developed regulatory capacity does seem to be behind the European Union’s external regulatory influence. While market power is an important element of extraterritoriality, the effective assertion of extraterritorial authority generally requires a certain level of institutional capacity. The logic of counter-extraterritoriality is the reverse of the logic of extraterritoriality; some sort of policy response to mitigate the negative effects that can arise from the beyond-the-border reach of laws and regulations.