Regulatory Mismatches in the United States and the European Union

Abstract This article explores regulatory mismatches, differences in regulations between different states, in the United States and the European Union (EU), focusing on their differing approaches to market integration and regulatory diversity. The United States emphasizes state autonomy, allowing regulatory pluralism to foster local experimentation and reflect diverse democratic preferences. The Supreme Court’s handling of mismatches through balancing is limited and inconsistent, with a preference for leaving unresolved issues to Congress. In contrast, the EU prioritizes legislative and, to a lesser extent, judicial, harmonization, and mutual recognition, with the Court of Justice rigorously reviewing member-state regulations for necessity, proportionality, and compatibility with fundamental market freedoms. Recent trends toward subsidiarity, however, signal a growing respect for national diversity. Both unions weigh state and market interests, but the US tends to see regulatory diversity as a federalism benefit, whereas the EU views harmonization as essential to its integration goals.