Regulation

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:

For other uses, see Regulation (disambiguation).

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 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.

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.[4]

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.[5]

Reasons

Regulations may create costs as well as benefits and may produce unintended reactivity effects, such as defensive practice.[6] Efficient regulations can be defined as those where total benefits exceed total costs.

Regulations can be advocated for a variety of reasons, including

  • Market failures - regulation due to inefficiency. Intervention due to what economists call market failure.
    • To constrain sellers' options in markets characterized by monopoly
    • As a means to implement collective action, in order to provide public goods
    • To assure adequate information in the market
    • To mitigate undesirable 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 intended to affect the development of certain preferences on an aggregate level
  • Professional conduct - the regulation of members of professional bodies, either acting under statutory or contractual powers.[7]
  • 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 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.[8]: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.

gollark: Well, it looks simple on that graph, at least.
gollark: Hmm, that's simpler than I thought then.
gollark: What does single-mode mean for lasers? I duckduckgoed it, but the answers seem kind of technical.
gollark: What maths? I don't really lasers, but that sounds impractical and horribly dangerous in several ways.
gollark: Have you done anything with lower power, comparatively safe lasers?

See also

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. Eraldo Banovac. Monitoringgrundlagen der kroatischen Regulierungsbehörde für Energie. EW − das Magazin für die Energie Wirtschaft, Vol. 103, No. 1-2, 2004, pp. 14-16.
  5. 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
  6. 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.
  7. Harris, Brian; Andrew Carnes (February 2011). Disciplinary and Regulatory Proceedings. Jordans. ISBN 978-1-84661-270-1.
  8. John Braithwaite, Péter Drahos. (2000). Global Business Regulation. Cambridge University Press.

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