Legal convergence and endogenous preferences

We develop a 2-country model of legal dynamics in which each country's social welfare depends generally on its actual law, its culturally ideal one, its technologically efficient one and the actual law of the other country. In our model, countries are better off when all these laws coincide. Moreover, in each country the actual law and the cultural biases of the population respond to the cost of legal diversity, the cost of the divergence between the actual law and both the culturally ideal law and the technological efficiency of regulation. We show that international legal convergence is possible without any coordination between countries. This happens when either there are no efficient legal rules, or when the technologically efficient rule is unique across countries. In that case, legal uniformity is realized in the long run. When there are country specific technologically efficient legal rules, we show that legal convergence is not possible in the long run.