Regulation refers to "controlling human or societal behaviour by rules or restrictions."
Regulation can take many forms:
- Legal restrictions promulgated by a government authority
- Self-regulation, social regulation (e.g. norms)
- Market regulation
One can consider regulation as actions of conduct imposing sanctions (such as a fine). This action of administrative law, or implementing regulatory law, may be contrasted with statutory or case law.
Regulation mandated by a state attempts to produce outcomes which might not otherwise occur, produce or prevent outcomes in different places to what might otherwise occur, or produce or prevent outcomes in different timescales than would otherwise occur.
Common examples of regulation include attempts to control market entries, prices, wages, pollution effects, employment for certain people in certain industries, standards of production for certain goods, the military forces and services.
The economics of imposing or removing regulations relating to markets is analysed in regulatory economics.
Types of regulation
Regulations, like any other form of coercive action, have costs for some and benefits for others. Efficient regulations may only be said to exist where the total benefits to some people exceed the total costs to others.
Regulations are justified using a variety of reasons and therefore can be classified in several broad categories:
- Market failures - regulation due to inefficiency. Intervention due to a classical economics argument to market failure.
- Risk of monopoly
- Collective action, or public good
- Inadequate information
- Unseen externalizations
- Collective desires - regulation about collective desires or considered judgements on the part of a significant segments of society
- Diverse experiences - regulation with a view of eliminating or enhancing opportunities for the formation of diverse preferences and beliefs
- Social subordination - regulation aimed to increase or reduce social subordination of various social groups
- Endogenous preferences - regulation's purpose is to affect the development of certain preferences on an aggregate level
- Irreversibility - regulation that deals with the problem of irreversibility – the problem in which a certain type of conduct from current generations results in outcomes from which future generations may not recover from at all.
- Interest group transfers - regulation that results from efforts by self-interest groups to redistribute wealth in their favor, which may disguise itself as one or more of the justifications above.
Deregulation, regulatory reform and liberalization
The second half of the 20th century saw a wave of attempts to modify some existing regulatory structures and systematize the creation and review of new ones. A part of this was the deregulation movement.
A parallel development with 'deregulation' has been organized, ongoing programs to review regulatory initiatives with a view to minimizing, simplifying, and making more cost effective regulations. Such efforts, given impetus by the Regulatory Flexibility Act of 1980 in the United States, are embodied in the United States Office of Management and Budget's Office of Information and Regulatory Affairs, and the United Kingdom's Better Regulation Commission.
Cost-benefit analysis is frequently used in such reviews. In addition, there have been regulatory innovations, usually suggested by economists, such as emissions trading. Academic research on wedding economic theory with regulatory activity continues.
From other point of view, liberalization does not always imply deregulation, but more players in the market (desoligolipolization).
- RegState.net: Barak Orbach's Regulatory State Course
- A Comparative Bibliography: Regulatory Competition on Corporate Law
- See Regulation & Governance, A new Blackwell Journal dedicated for the study of Regulation
- Reports of UK practice from the Better Regulation Commission
- A glimpse into some United Kingdom deregulatory procedures
- An Introduction to Regulation
- Regulation updates service on the UK government Business Link website
- ECPR Standing Group on Regulatory Governance maintains a website that is dedicated to the subject
- Mercatus Center at George Mason University has a Regulatory Studies Program
- ReguStand dedicated for helping SMEs manage regulation
- Regulatory law in the UK
- ICTs, Markets and Regulation The role of markets and reasons for their failure, and in the information and communications technologies arena, the affects of innovation and convergence on market structure, and the relative importance of market failure and social responsibility as reasons for regulating (2005)
- Center for Financial Market Regulation
- Body of Knowledge on Infrastructure Regulation
- A Prescription to Retire the Rhetoric of 'Principles-Based Systems' in Corporate Law, Securities Regulation and Accounting Lawrence A. Cunningham, (2007)