Regulatory integration and transregional corporations’ new investments under ex-ante regulation and ex-post liability: A real option perspective

Regulatory integration and transregional corporations’ new investments under ex-ante regulation and ex-post liability: A real option perspective | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article Regulatory integration and transregional corporations’ new investments under ex-ante regulation and ex-post liability: A real option perspective Mengshuai Zhu, Kutay Cingiz, Jifang Liu, Justus Wesseler This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-6918023/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract Corporations operating across diverse regions face complex rules and regulations that impact corporate investment behavior. To evaluate the economic implications of regulatory heterogeneity, in this paper, we analyze optional harmonized regulation by comparing two regulatory regimes at the multi-regional (national) level: harmonized regulation (HR) and individual regulation (IR). Utilizing a real option model incorporating ex-ante regulation and ex-post liability, we find that, under optional harmonized regulation, there is a noticeable threshold, the number of regions, where bigger firms (above the threshold) would follow HR, and smaller firms (below the threshold) benefit more from adhering to IR. More importantly, our study finds that differential economic impacts of changes in regulatory integration for firms of varying sizes. Bigger firms could benefit from increased regulatory integration, while smaller firms may be adversely affected. Conversely, decreased regulatory integration would have the opposite effect. Moreover, the identified threshold decreases when considering the options to expand to additional regions. Finally, we conduct a Monte Carlo simulation using the EU fertilizer regulation as a case study and the policy implications that follow. Regulatory harmonization regulatory heterogeneity real options options to expand approval costs fertilizer regulation. Full Text Additional Declarations No competing interests reported. Supplementary Files Supplementalfiles.docx Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. 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Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-6918023","acceptedTermsAndConditions":true,"allowDirectSubmit":true,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":477806231,"identity":"9803f66d-3cff-483b-8475-2c4cfc8d8efd","order_by":0,"name":"Mengshuai Zhu","email":"data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAZAAAAAyAQMAAABI0h/eAAAABlBMVEX///8AAABVwtN+AAAACXBIWXMAAA7EAAAOxAGVKw4bAAAA40lEQVRIiWNgGAWjYDACCShtAMQHPpCs5eAMkrUw8xCjQ352j+mGjztq7c0lkh8etqmxk5dvYH72AJ8WxjlnzG7OPHM8ceeMNIPDOceSDTccYDM3wKeFWSLH7DZv27EEgxsJBodzG5gZNzDwsEng08IG0vK37Zi9wY30D4ctG+rt5zcQ0MID0sLYVsO44UaOwWHGhsOJDQcIaJGQSCu72dt2IHHDmTcFB3uOHU/ecJjNDK8W+RnJ2278bKuzNzievvnDj5pq2/ntzc/waoGCw0hsZiLUA0EdccpGwSgYBaNgZAIASVhNrkq7UlcAAAAASUVORK5CYII=","orcid":"","institution":"Chinese Academy of Agricultural Sciences","correspondingAuthor":true,"prefix":"","firstName":"Mengshuai","middleName":"","lastName":"Zhu","suffix":""},{"id":477806232,"identity":"007307cb-49e9-48d9-8bc9-858366a16b95","order_by":1,"name":"Kutay Cingiz","email":"","orcid":"","institution":"Wageningen University","correspondingAuthor":false,"prefix":"","firstName":"Kutay","middleName":"","lastName":"Cingiz","suffix":""},{"id":477806236,"identity":"f04bf45d-dbbe-475e-a8e8-3d60e3d84533","order_by":2,"name":"Jifang Liu","email":"","orcid":"","institution":"Chinese Academy of Agricultural Sciences","correspondingAuthor":false,"prefix":"","firstName":"Jifang","middleName":"","lastName":"Liu","suffix":""},{"id":477806239,"identity":"80da464d-3d35-49d7-9cd6-ac8e576bb5cc","order_by":3,"name":"Justus Wesseler","email":"","orcid":"","institution":"Wageningen University","correspondingAuthor":false,"prefix":"","firstName":"Justus","middleName":"","lastName":"Wesseler","suffix":""}],"badges":[],"createdAt":"2025-06-18 01:38:15","currentVersionCode":1,"declarations":"","doi":"10.21203/rs.3.rs-6918023/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-6918023/v1","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":99320088,"identity":"23d2b562-71a7-4355-be44-b1bcab016c3c","added_by":"auto","created_at":"2025-12-31 16:38:13","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":556156,"visible":true,"origin":"","legend":"","description":"","filename":"maindocument.pdf","url":"https://assets-eu.researchsquare.com/files/rs-6918023/v1_covered_f9e54667-138a-4493-ae93-54556ee42982.pdf"},{"id":85727024,"identity":"187180ab-0930-4596-8054-9613928cbfe3","added_by":"auto","created_at":"2025-07-01 06:50:05","extension":"docx","order_by":0,"title":"","display":"","copyAsset":false,"role":"supplement","size":169713,"visible":true,"origin":"","legend":"","description":"","filename":"Supplementalfiles.docx","url":"https://assets-eu.researchsquare.com/files/rs-6918023/v1/ae6ced07b522dfd7330b0a1a.docx"}],"financialInterests":"No competing interests reported.","formattedTitle":"Regulatory integration and transregional corporations’ new investments under ex-ante regulation and ex-post liability: A real option perspective","fulltext":[],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":false,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":false,"hideJournal":true,"highlight":"","institution":"","isAcceptedByJournal":false,"isAuthorSuppliedPdf":true,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":true,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true},"keywords":"Regulatory harmonization, regulatory heterogeneity, real options, options to expand, approval costs, fertilizer regulation.","lastPublishedDoi":"10.21203/rs.3.rs-6918023/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-6918023/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"\u003cp\u003eCorporations operating across diverse regions face complex rules and regulations that impact corporate investment behavior. 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