Sustainability of the Brussels Effect and Network Externalities: Focusing on Inelastic Targets and Non-Divisibility

The Brussels effect refers to a kind of normative or soft power inherent in the EU. The EU is able to use its regulatory power to force firms in the region, or those wishing to enter the region, to accept EU regulation and, in the process, to disseminate internalized regulation as an international standard. Bradford identifies market size, regulatory capacity, strict regulation, inelastic targets and non-divisibility as the components of the Brussels effect. This study focuses on inelastic targets and non-divisibility as key to the sustainability of the Brussels effect. Inelastic targets refer to products or producers that are unresponsive to regulatory change, locking them into a particular regulatory regime. Non-divisibility refers to the globally uniform and indivisible nature of rules or regulations set by a strong regulatory authority. This paper explains The interaction of inelastic targets and non-divisibility, and results in so-called network externalities, which increases the sustainability of the Brussels effect.