Leveraging Corporate Law: A Broader Account of Delaware's Competition

Abstract

Delaware inhabits a competitive landscape that includes, but is not limited to, corporate law. Like other small jurisdictions active in cross-border corporate and financial services, Delaware has become widely associated with a particular area of specialization, providing de facto U.S. corporate law for large, publicly traded companies. However, the economic development imperatives prompting this have also led Delaware to explore opportunities in related though distinct fields that build upon this platform – effectively leveraging their corporate law advantage to expand and diversify the state's revenue streams. This article assesses Delaware's competitive position amidst this broader landscape. Part II provides an overview of prevailing accounts of U.S. corporate charter competition, which generally conclude that Delaware no longer faces substantial competition from other states; when the frame of reference is limited to domestic corporate charter competition, only federal preemption would appear to pose a substantial threat to Delaware's dominance. In response to these prevailing accounts, this part suggests that such a narrow view of the competitive landscape misses important dynamics that could affect Delaware's position moving forward. Minimally, these include the emergence of competitors abroad that challenge Delaware's corporate dominance on multiple fronts – both internationally and with respect to chartering of large companies based in the United States. Part III pushes the analysis further, however, by assessing Delaware's broader competitive landscape beyond corporate law, as such. This section reframes the matter by reference to underlying economic development imperatives, which are particularly pressing for smaller, resource-constrained jurisdictions like Delaware. It then examines Delaware's efforts to leverage corporate law – that is, to build on Delaware's corporate law advantage by expanding into related though distinct fields that build upon that preexisting platform, including aspects of financial services and insurance where chartering and innovative entity structures loom large. Part IV concludes, observing that this broader framing – including cross-border and extra- corporate dynamics – reveals a more complex competitive landscape than prevailing accounts can accommodate. Overall, Delaware faces real competition from a range of domestic and foreign jurisdictions that have grappled with similar economic development challenges through similar strategies, producing global competitive dynamics that may substantially impact Delaware's long-term prospects.