Under circumstances where a relatively clear rule

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Under circumstances where a relatively clear rule like territorial conduct would minimize the transaction costs of reallocation, as in circumstances where the conduct occurs in only one location, or like a rule of recognition, theory predicts that such clear rules would be chosen. 32 This position assumes that it would be more costly to get the initial allocation right–to align allocation with states’ preferences–than to establish a system that would allow states through their autonomous actions to get the reallocation right–to engage in subsequent transactions in order to align allocation with states’ preferences. Territoriality is the leading jurisdictional principle today, but it might be argued that territoriality is under pressure from two sources. First, technology like cyberspace makes territoriality less clear, as conduct relating to a particular matter may more easily occur in multiple territories. Second, territorial conduct-based jurisdiction is increasingly inconsistent with territorial effects, giving rise to greater externalities. Under these circumstances, territoriality as a default rule seems less stable. On the other hand, where it is not costly to determine which state should initially be allocated jurisdiction in order to maximize aggregate wealth, states should agree on these allocations in order to avoid the potential transaction costs of reallocation to reach these positions. Thus, where one state is affected substantially more greatly than other involved states, and the costs of reallocation are positive, it might be best initially to allocate jurisdiction to the state that is more greatly affected. Under these transaction cost circumstances, allocation of jurisdiction in accordance with effects might be selected. This would argue for allocation of authority necessary to prevent cyberspace terrorism to the U.S., which (i) has the most to lose of any state, (ii) is a likely target, and (iii) has substantial expertise to address these problems. Alternatively, authority might be shared among the states with the most to lose. This would suggest an OECD-based regime, or a facially multilateral regime driven by U.S. and European interests: “uni- multilateralism.” Under high transaction cost circumstances one possibly appropriate strategy would be to establish an organization to “hold” and reallocate jurisdiction. Thus, it might be useful–it might be efficient in terms of maximizing overall welfare–to share jurisdiction over these types of problems in an organization. So horizontal jurisdiction problems may manifest themselves as subsidiarity problems: should the state retain jurisdiction or should jurisdiction be delegated to an international organization? Of 32 Trachtman, supra note 29.
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Global Cyberterrorism, Jurisdiction, and International Organization 20 course, when we ask this question, we must also ask about the governance structure of the proposed international organization.
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