Regulation

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Regulation is the management of complex systems according to a set of rules and trends. In systems theory, these types of rules exist in various fields of biology and society, but the term has slightly different meanings according to context. For example:

Contents

Social

Regulation in the social, political, psychological, and economic domains can take many forms: legal restrictions promulgated by a government authority, contractual obligations (for example, contracts between insurers and their insureds [1] ), self-regulation in psychology, social regulation (e.g. norms), co-regulation, third-party regulation, certification, accreditation or market regulation. [2]

State-mandated regulation is government intervention in the private market in an attempt to implement policy and produce outcomes which might not otherwise occur, [3] ranging from consumer protection to faster growth or technological advancement.

The regulations may prescribe or proscribe conduct ("command-and-control" regulation), calibrate incentives ("incentive" regulation), or change preferences ("preferences shaping" regulation). Common examples of regulation include limits on environmental pollution , laws against child labor or other employment regulations, minimum wages laws, regulations requiring truthful labelling of the ingredients in food and drugs, and food and drug safety regulations establishing minimum standards of testing and quality for what can be sold, and zoning and development approvals regulation. Much less common are controls on market entry, or price regulation.

One critical question in regulation is whether the regulator or government has sufficient information to make ex-ante regulation more efficient than ex-post liability for harm and whether industry self-regulation might be preferable. [4] [5] [6] [7] The economics of imposing or removing regulations relating to markets is analysed in empirical legal studies, law and economics, political science, environmental science, health economics, and regulatory economics.

Power to regulate should include the power to enforce regulatory decisions. Monitoring is an important tool used by national regulatory authorities in carrying out the regulated activities. [8]

In some countries (in particular the Scandinavian countries) industrial relations are to a very high degree regulated by the labour market parties themselves (self-regulation) in contrast to state regulation of minimum wages etc. [9]

Reasons

Regulations may create costs as well as benefits and may produce unintended reactivity effects, such as defensive practice. [10] Efficient regulations can be defined as those where total benefits exceed total costs.

Regulations can be advocated for a variety of reasons, including [ citation needed ]

The study of formal (legal or official) and informal (extra-legal or unofficial) regulation constitutes one of the central concerns of the sociology of law.

History

Regulation of businesses existed in the ancient early Egyptian, Indian, Greek, and Roman civilizations. Standardized weights and measures existed to an extent in the ancient world, and gold may have operated to some degree as an international currency. In China, a national currency system existed and paper currency was invented. Sophisticated law existed in Ancient Rome. In the European Early Middle Ages, law and standardization declined with the Roman Empire, but regulation existed in the form of norms, customs, and privileges; this regulation was aided by the unified Christian identity and a sense of honor regarding contracts. [12] : 5 

Modern industrial regulation can be traced to the Railway Regulation Act 1844 in the United Kingdom, and succeeding Acts. Beginning in the late 19th and 20th centuries, much of regulation in the United States was administered and enforced by regulatory agencies which produced their own administrative law and procedures under the authority of statutes. Legislators created these agencies to allow experts in the industry to focus their attention on the issue. At the federal level, one of the earliest institutions was the Interstate Commerce Commission which had its roots in earlier state-based regulatory commissions and agencies. Later agencies include the Federal Trade Commission, Securities and Exchange Commission, Civil Aeronautics Board, and various other institutions. These institutions vary from industry to industry and at the federal and state level. Individual agencies do not necessarily have clear life-cycles or patterns of behavior, and they are influenced heavily by their leadership and staff as well as the organic law creating the agency. In the 1930s, lawmakers believed that unregulated business often led to injustice and inefficiency; in the 1960s and 1970s, concern shifted to regulatory capture, which led to extremely detailed laws creating the United States Environmental Protection Agency and Occupational Safety and Health Administration.

Measurement

Regulation can be assessed for different countries through various quantitative measures. The Global Indicators of Regulatory Governance [13] by World Bank’s Global Indicators Group scores 186 countries on transparency around proposed regulations, consultation on their content, the use of regulatory impact assessments and the access to enacted laws on a scale from 0 to 5. The V-Dem Democracy indices include the regulatory quality indicator. [14] The QuantGov project [15] at the Mercatus Center tracks the count of regulations by topic for USA, Canada, and Australia.

See also

Related Research Articles

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In the United States government, independent agencies are agencies that exist outside the federal executive departments and the Executive Office of the President. In a narrower sense, the term refers only to those independent agencies that, while considered part of the executive branch, have regulatory or rulemaking authority and are insulated from presidential control, usually because the president's power to dismiss the agency head or a member is limited.

<span class="mw-page-title-main">Financial regulation</span> Rules or restrictions for financial institutions

Financial regulation is a form of regulation or supervision, which subjects financial institutions to certain requirements, restrictions and guidelines, aiming to maintain the stability and integrity of the financial system. This may be handled by either a government or non-government organization. Financial regulation has also influenced the structure of banking sectors by increasing the variety of financial products available. Financial regulation forms one of three legal categories which constitutes the content of financial law, the other two being market practices and case law.

Economic interventionism, sometimes also called state interventionism, is an economic policy position favouring government intervention in the market process with the intention of correcting market failures and promoting the general welfare of the people. An economic intervention is an action taken by a government or international institution in a market economy in an effort to impact the economy beyond the basic regulation of fraud, enforcement of contracts, and provision of public goods and services. Economic intervention can be aimed at a variety of political or economic objectives, such as promoting economic growth, increasing employment, raising wages, raising or reducing prices, promoting income equality, managing the money supply and interest rates, increasing profits, or addressing market failures.

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Government failure, in the context of public economics, is an economic inefficiency caused by a government intervention, if the inefficiency would not exist in a true free market. The costs of the government intervention are greater than the benefits provided. It can be viewed in contrast to a market failure, which is an economic inefficiency that results from the free market itself, and can potentially be corrected through government regulation. However, Government failure often arises from an attempt to solve market failure. The idea of government failure is associated with the policy argument that, even if particular markets may not meet the standard conditions of perfect competition required to ensure social optimality, government intervention may make matters worse rather than better.

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References

  1. ↑ Marcos Antonio Mendoza, "Reinsurance as Governance: Governmental Risk Management Pools as a Case Study in the Governance Role Played by Reinsurance Institutions", 21 Conn. Ins. L.J. 53, (2014) https://ssrn.com/abstract=2573253
  2. ↑ Levi-Faur, David, Regulation and Regulatory Governance, Jerusalem Papers in Regulation and Governance, No. 1, 2010
  3. ↑ Orbach, Barak, What Is Regulation? 30 Yale Journal on Regulation Online 1 (2012)
  4. ↑ Sim, Michael (2018). "Limited Liability and the Known Unknown". Duke Law Journal. 68: 275–332. doi:10.2139/ssrn.3121519. ISSN   1556-5068. S2CID   44186028 – via SSRN.
  5. ↑ Schwarcz, Steven L. (2011). "Keynote & Chapman Dialogue Address: Ex Ante Versus Ex Post Approaches to Financial Regulation". SSRN Electronic Journal. doi:10.2139/ssrn.1748007. ISSN   1556-5068. S2CID   154354509.
  6. ↑ Hosoe, Moriki (2020), "Ex-ante Regulation, Ex-post Regulation, and Collusion", Applied Economic Analysis of Information and Risk, Singapore: Springer Singapore, pp. 49–66, doi:10.1007/978-981-15-3300-6_4, ISBN   978-981-15-3299-3, S2CID   216306756 , retrieved 2020-11-03
  7. ↑ Shavell, Steven (October 1983). "Liability for Harm Versus Regulation of Safety". Cambridge, MA. doi:10.3386/w1218.
  8. ↑ Eraldo Banovac. Monitoringgrundlagen der kroatischen Regulierungsbehörde für Energie. EW − das Magazin für die Energie Wirtschaft, Vol. 103, No. 1–2, 2004, pp. 14–16.
  9. ↑ Anders Kjellberg (2017) ”Self-regulation versus State Regulation in Swedish Industrial Relations” In Mia Rönnmar and Jenny Julén Votinius (eds.) Festskrift till Ann Numhauser-Henning. Lund: Juristförlaget i Lund 2017, pp. 357-383
  10. ↑ McGivern, Gerry; Fischer, Michael Daniel (1 February 2012). "Reactivity and reactions to regulatory transparency in medicine, psychotherapy and counselling" (PDF). Social Science & Medicine. 74 (3): 289–296. doi:10.1016/j.socscimed.2011.09.035. PMID   22104085. Archived from the original (PDF) on 21 April 2018. Retrieved 20 April 2018.
  11. ↑ Harris, Brian; Andrew Carnes (February 2011). Disciplinary and Regulatory Proceedings. Jordans. ISBN   978-1-84661-270-1.
  12. ↑ John Braithwaite, Péter Drahos. (2000). Global Business Regulation. Cambridge University Press.
  13. ↑ Global Indicators of Regulatory Governance
  14. ↑ Sigman, Rachel, and Staffan I. Lindberg. "Neopatrimonialism and democracy: An empirical investigation of Africa's political regimes." V-Dem Working Paper 56 (2017).
  15. ↑ "QuantGov". quantgov.org. Retrieved June 4, 2023.

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