This introduction to the special issue combines a review of the existing literature about the causes and consequences of private regulation in the global economy with a preview of the articles in this issue. To organize this (p)review, I introduce a conceptual model “beyond supply and demand,” which distinguishes three major subsets of stakeholders of global private regulation, which may (but need not) overlap: the political actors who call for private regulation, the rule-makers who provide such governance for the global economy, and what I call the “targets” of the private regulations, who are supposed to behave according to these private rules. I then highlight the three core questions addressed by the contributions to the special issue: (1) How do private bodies attain regulatory authority; why do private regulators provide governance; and why do the targets of the rules comply? (2) Who governs the global economy through private regulations? And (3) what are the effects of private regulation, and how does the rise of private regulation affect public regulatory authority and capacity?

This paper seeks to explain the success of two NGOs in creating standards for calculating and reporting greenhouse gas (GHG) emissions at the level of an entire company. These emissions accounting standards, called the Greenhouse Gas Protocol, have been widely adopted by multinational firms, emissions reporting registries, and even an emissions trading scheme. The paper traces the widespread adoption of the standards, and then offers an explanation for this successful instance of private regulation. It presents a supply and demand model of private entrepreneurial authority—where private actors project authority without delegation by states. The two NGOs were successful rule-makers because they were able meet a demand for three benefits to potential users of the standard: reduced transaction costs, first-mover advantage, and an opportunity to burnish their reputation as environmental leaders. The paper also explains the supply of private authority—that is, why we see entrepreneurial authority rather than delegation by states. The disagreement among developed countries on the appropriate role for emissions trading in the climate regime delayed action on developing firm-level accounting methodologies. Moreover, the relative weakness of the focal institution in the climate regime—the climate change Secretariat—meant that there was no obvious international organization to take up the task of creating new measurement tools.

Private regulation often entails competition among multiple rule-makers, but private rules and regulators do not always compete. For substantial parts of the global economy, a single private body (per issue) is recognized as the focal point for global rule-making. The selection of the institutional setting here effectively takes place prior to drawing up the specific rules, with important consequences for the politics of regulating global markets. In this paper, I develop a theoretical explanation for how a private transnational organization may attain such preeminence—how it can become the focal point for rule-making—in its area of expertise. I emphasize the transnational body's capacity to pursue its organizational self-interest, as well as timing and sequence. I then examine empirically a particularly important body of this kind, which today is essentially uncontested as the focal point for private regulation in its area, even though its standards often have substantial distributive implications: the International Electrotechnical Commission (IEC). I analyze the persistence and changes in the IEC's formal rules or procedures and informal norms, as well as the broadening scope of its regulatory authority and membership over more than a century.

This paper investigates the creation and consequences of private regulation in global food governance. It points to the power to govern and the authority to govern as the two crucial conditions for the emergence and diffusion of private food regulation. More specifically, the paper argues that the power to govern is a function of the structural power of agrifood corporations, particularly retail food corporations in our case. The authority to govern is a function of the perceived legitimacy of retail food corporations as political actors. By linking power and authority to the material and ideational structures existing in the global political economy of food, this paper analyses the processes that serve to create, maintain and reproduce private regulation in food governance. With its analysis, the paper aims to contribute to the theoretical and empirical debates on private authority, private regulation and the challenges for sustainability in the global food system.

Private regulation has become a highly debated phenomenon. Previous research has focused mostly on the effectiveness, legitimacy, and governance structure of private regulators at the global level. Few existing analyses have focused on private regulation at the European level, where only questions of interest representation have attracted attention. Analyses of the contribution of private regulation to the process of European legal integration, in particular, are lacking. We seek to fill this gap. From private rules for product safety and for financial markets, such as the Single Euro Payments Area standards, to private rules governing the professions, we observe that private regulation has facilitated and accelerated European legal integration. We argue that in some cases this effect was anticipated, especially by the European Commission, and in those cases the intended effect on European legal integration at least partly explains the rise of private regulation. I other cases, it was an incidental by-product of attempts to address market failures or achieve network legitimacy. In the conclusion, we turn to questions of accountability and legitimacy raised by the increasing importance of private regulators in the Common Market of the EU. Although the EU lacks a body of rules that imposes democratic controls on private regulators, we identify components of European law that can be used as control mechanisms.

Systems for certifying sustainable resource use and decent labor conditions have become prominent modes of private regulation at the transnational level. But serious questions remain about how these global standards are put into practice in particular places, especially in developing countries. Drawing on fieldwork in Indonesia, this paper examines the growth of certification of sustainable forestry (e.g., through the Forest Stewardship Council) and certification of decent labor conditions in factories (e.g., through Social Accountability International). Based on the controversy that surrounded both sweatshops and deforestation in Indonesia, and the export dependence of both the apparel/footwear and forest products sectors, these would appear to be prime candidates for the application of certification. Yet in both sectors, the growth of multi-stakeholder certification has been limited. Furthermore, private regulation in Indonesia has taken somewhat divergent paths in these two sectors, which shapes certification's significance at the point of production. The paper examines how the socio-legal context of certification, the character of supply chain relationships, and possible differences in the politics of labor and the environment can help to explain these patterns and contribute to a richer sense of private regulation's “on the ground” manifestations.

Hundreds of “eco-labels” and “social labels” exist for consumer products. These labels claim to provide information about characteristics of these products, which consumers cannot directly observe but which many of them consider desirable, such as low environmental impact, good treatment of workers during production, and relatively high prices paid to the local producers of ingredients from developing countries. Third-party certifiers are supposed to solve the well-known problem that a producer's unilateral declarations lack credibility, given the producer's conflict of interest and the information asymmetries between producer and consumer. Much of the literature on global private regulation—through standards for environmental sustainability, corporate social responsibility, among others—assumes that third-party certification works (i.e., overcomes the problems of producer self-declaration). But closer inspection shows that many third-party certifiers lack credibility. This article examines why some third party certifiers are more credible than others. In doing so, we elucidate the ways in which social capital and trust bolster third party certifiers' credibility. The empirical analysis focuses primarily on Kosher food labels within the global food supply chain. We then explore the consequences of the credibility paradox for other third party certified labels that promote social and environmental values.

Those supplying private regulation in the global economy face two fundamental challenges if they are to ameliorate the problems for which they create these systems: targets must conform to, while demanders must have proof of, regulatory compliance. This paper explores an important area absent from assessments as to whether, when, and how, private regulatory bodies are successful in improving behavior and rewarding compliant firms: the role of technological innovations. Employing an inductive, comparative case study analysis, we offer an analytical framework that distinguishes technological innovations that improve tracking mechanisms from innovations that directly improve on-the-ground performance. We illustrate the utility of the analytical framework through an assessment of technological innovations in shaping “non-state market driven” global certification programs governing forestry, fisheries, coffee, e-waste, and climate.

Scholars of international relations and global governance are increasingly interested in the transnational commercial arbitration system. So far, they have tended to characterize the system as a form of private global governance. However, using a combination of empirical and legal analysis, this article draws attention to the critical role of the state in the transnational commercial arbitration system, and shows that both rule-making and enforcement in the system depend largely on interactions between private and public actors. By treating arbitration as a form of private governance, scholars run the risk of obscuring these interactions and hindering their understanding of how transnational economic activity is governed. This article therefore argues for a modest reorientation of global governance scholarship on transnational commercial arbitration in a direction that focuses more closely on private-public interaction. More broadly, this article suggests that understanding interactions between private and public actors is a key to understanding global governance in general, and it raises doubts about the analytical desirability of a sharp distinction between private and public forms of global governance.

Corporate codes of conduct, product certifications, process standards, and other voluntary, non-governmental forms of private governance have proliferated in the last two decades. These innovations are a response to social pressures unleashed by globalization and the inadequacy of governmental institutions for addressing its social and environmental impacts. Private governance has had some notable successes, but there are clear limits to what it alone can be expected to accomplish. We hypothesize that the effectiveness of private governance depends on four main factors: 1) the structure of the particular global value chain in which production takes place; 2) the extent to which demand for a firm's products relies on its brand identity; 3) the possibilities for collective action by consumers, workers, or other activists to exert pressure on producers; and 4) the extent to which commercial interests of lead firms align with social and environmental concerns. Taken together, these hypotheses suggest that private governance will flourish in only a limited set of circumstances. With the trend towards consolidation of production in the largest developing countries, however, we also see a strengthening of some forms of public governance. Private governance will not disappear, but it will be linked to emerging forms of multi-stakeholder institutions.

In this concluding essay to the special issue on Private Regulation in the Global Economy, I review the main findings, focused on the answers that the papers in this issue jointly suggest to the three sets of core questions noted in the introductory essay: (1) How do private bodies attain regulatory authority? Why do private regulators provide governance and why do the targets of these rules comply? (2) Who governs? Who are the key actors in private regulation and what are their motivations? (3) What is the effect of the rise of private regulation on public regulatory authority and capacity? I then identify and discuss several key issues to develop a research agenda for what I call “global private politics.”