Regulatory Offsetting Schemes as Effective Governmental Self-Binding Device? Lessons From the German Experience

Abstract

Governments in advanced democracies often implement self-binding mechanisms like regulatory offsetting schemes to counteract short-term political incentives. This paper evaluates the effectiveness of Germany’s offsetting scheme by analyzing over 3000 legal acts for restrictive clauses and passages related to replacing or repealing existing regulations. Despite Germany being a “least likely” case for failure, our analysis indicates that the scheme has not reduced regulatory burdens. These findings suggest that self-binding measures struggle to override political incentives for rule production, especially with inadequate monitoring. We contribute to the literature by systematically assessing governmental self-binding effectiveness, introducing a novel methodological approach based on large language models, and employing a robust difference-in-differences design to estimate counterfactual effects. Our study highlights the challenges of implementing effective self-binding mechanisms in democratic governance.