Regulation

Regulation is administrative legislation that constitutes or constrains rights and allocates responsibilities. It can be distinguished from primary legislation (by Parliament or elected legislative body) on the one hand and judicial decisions on the other hand. Regulation can take many forms: legal restrictions promulgated by a government authority, self-regulation by an industry such as through a trade association, social regulation (e.g. norms), co-regulation, or market regulation. One can consider regulation as actions of conduct imposing sanctions, such as a fine, to the extent permitted by the law of the land. 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. In this way, regulations can be seen as implementation artifacts of policy statements. Common examples of regulation include controls on market entries, prices, wages, Development approvals, 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 are defined as those 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 externalities
 * Collective desires - regulation about collective desires or considered judgments on the part of a significant segment 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.
 * Professional conduct - the regulation of members of professional bodies, either acting under statutory or contractual powers.
 * Interest group transfers - regulation that results from efforts by self-interest groups to redistribute wealth in their favor, which may be disguised as one or more of the justifications above.

The study of formal (legal and/or official) and informal (extera-legal and/or unofficial) regulation constitutes one of the central concerns of the Sociology of law. Legal sociologists have in particular been interested in exploring the limits of formal and legal regulation in changing patterns of social behaviour.

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, standardization, and the power of the after the decline of Rome, 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 in regard to contracts.

Beginning in the late 19th and 20th century, 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 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 a clear life-cycle and patterns of behavior, and 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 Environmental Protection Administration and Occupational Safety and Health Administration. Agencies and regulatory laws have slowed the growth of business and granted protection to businesses, although this is not always inappropriate given the potentially destabalizing effects of rapid change. wag1]

According to the Small Business Administration the cost to the economy of government regulation is approximately $1.75 trillion per annum.

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. Ironically, the deregulation movement is sometimes driven through the creation of deregulatory bodies that are themselves based in regulation.

From other point of view, liberalization does not always imply deregulation, but more players in the Market (desoligolipolization).

Wikibooks

 * Legal and Regulatory Issues in the Information Economy
 * Lawrence A. Cunningham, A Prescription to Retire the Rhetoric of 'Principles-Based Systems' in Corporate Law, Securities Regulation and Accounting (2007)

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