Regulation

From Wikinvestor

Regulation can be considered as legal restrictions promulgated by government authority. 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 Tertiary sector of services.

The economics of imposing or removing regulations relating to markets is analysed in regulatory economics.

Regulation and statute

A statute is passed by the legislature. A statute can have regulatory intent.

An implementing regulation (in democratic systems using laws as the basis for state action) is adopted by a public administration regulatory agency. In some national venues, there may be further review, as by an Office of Administrative Law (OAL). In countries with well established judicial systems, the regulation will be subject to judicial review, on challenge by a party having standing to bring an action ('standing' is usually interpreted to mean being adversely affected).

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).