Regulation

Regulation

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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 judge-made law on the other. Regulation can take many forms: legal
Law
Law is a system of rules and guidelines which are enforced through social institutions to govern behavior, wherever possible. It shapes politics, economics and society in numerous ways and serves as a social mediator of relations between people. Contract law regulates everything from buying a bus...

 restrictions promulgated by a government
Government
Government refers to the legislators, administrators, and arbitrators in the administrative bureaucracy who control a state at a given time, and to the system of government by which they are organized...

 authority, self-regulation
Self-policing
Self-policing, a form of self-regulation, is the process whereby an organization is asked, or volunteers, to monitor its own adherence to legal, ethical, or safety standards, rather than have an outside, independent agency such as a governmental entity monitor and enforce those standards.-To the...

 by an industry such as through a trade association
Trade association
A trade association, also known as an industry trade group, business association or sector association, is an organization founded and funded by businesses that operate in a specific industry...

, social regulation
Social control
Social control refers generally to societal and political mechanisms or processes that regulate individual and group behavior, leading to conformity and compliance to the rules of a given society, state, or social group. Many mechanisms of social control are cross-cultural, if only in the control...

 (e.g. norm
Norm (sociology)
Social norms are the accepted behaviors within a society or group. This sociological and social psychological term has been defined as "the rules that a group uses for appropriate and inappropriate values, beliefs, attitudes and behaviors. These rules may be explicit or implicit...

s), co-regulation, or market regulation. One can consider regulation as actions of conduct imposing sanctions
Punishment
Punishment is the authoritative imposition of something negative or unpleasant on a person or animal in response to behavior deemed wrong by an individual or group....

, such as a fine, to the extent permitted by the law of the land. This action of administrative law
Administrative law
Administrative law is the body of law that governs the activities of administrative agencies of government. Government agency action can include rulemaking, adjudication, or the enforcement of a specific regulatory agenda. Administrative law is considered a branch of public law...

, or implementing regulatory law, may be contrasted with statutory
Statute
A statute is a formal written enactment of a legislative authority that governs a state, city, or county. Typically, statutes command or prohibit something, or declare policy. The word is often used to distinguish law made by legislative bodies from case law, decided by courts, and regulations...

 or case law
Case law
In law, case law is the set of reported judicial decisions of selected appellate courts and other courts of first instance which make new interpretations of the law and, therefore, can be cited as precedents in a process known as stare decisis...

.

Regulation mandated by a state
State (polity)
A state is an organized political community, living under a government. States may be sovereign and may enjoy a monopoly on the legal initiation of force and are not dependent on, or subject to any other power or state. Many states are federated states which participate in a federal union...

 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
Policy
A policy is typically described as a principle or rule to guide decisions and achieve rational outcome. The term is not normally used to denote what is actually done, this is normally referred to as either procedure or protocol...

 statements. Common examples of regulation include controls on market entries, price
Price
-Definition:In ordinary usage, price is the quantity of payment or compensation given by one party to another in return for goods or services.In modern economies, prices are generally expressed in units of some form of currency...

s, wage
Wage
A wage is a compensation, usually financial, received by workers in exchange for their labor.Compensation in terms of wages is given to workers and compensation in terms of salary is given to employees...

s, Development approvals
Development approvals
Development approvals is a general reference to the broad suite of regulatory approvals that must be obtained prior to commencing a development. With few exceptions, all development activities are subject to Regulation through-out the world's soveriegn juridictions...

, pollution
Pollution
Pollution is the introduction of contaminants into a natural environment that causes instability, disorder, harm or discomfort to the ecosystem i.e. physical systems or living organisms. Pollution can take the form of chemical substances or energy, such as noise, heat or light...

 effects, employment
Employment
Employment is a contract between two parties, one being the employer and the other being the employee. An employee may be defined as:- Employee :...

 for certain people in certain industries
Industry
Industry refers to the production of an economic good or service within an economy.-Industrial sectors:There are four key industrial economic sectors: the primary sector, largely raw material extraction industries such as mining and farming; the secondary sector, involving refining, construction,...

, standards of production for certain goods, the military forces and services
Tertiary sector of industry
The tertiary sector of the economy is one of the three economic sectors, the others being the secondary sector and the primary sector .The service sector consists of the "soft" parts of the economy, i.e...

.
The economics
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...

 of imposing or removing regulations relating to markets is analysed in regulatory economics
Regulatory economics
Regulatory economics is the economics of regulation, in the sense of the application of law by government that is used for various purposes, such as centrally-planning an economy, remedying market failure, enriching well-connected firms, or benefiting politicians...

.

Types of regulation


Regulations, like any other form of coercive
Coercion
Coercion is the practice of forcing another party to behave in an involuntary manner by use of threats or intimidation or some other form of pressure or force. In law, coercion is codified as the duress crime. Such actions are used as leverage, to force the victim to act in the desired way...

 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 failure
    Market failure
    Market failure is a concept within economic theory wherein the allocation of goods and services by a free market is not efficient. That is, there exists another conceivable outcome where a market participant may be made better-off without making someone else worse-off...

    s - regulation due to inefficiency. Intervention due to a classical economics
    Classical economics
    Classical economics is widely regarded as the first modern school of economic thought. Its major developers include Adam Smith, Jean-Baptiste Say, David Ricardo, Thomas Malthus and John Stuart Mill....

     argument to market failure.
    • Risk of monopoly
      Monopoly
      A monopoly exists when a specific person or enterprise is the only supplier of a particular commodity...

    • Collective action, or public good
      Public good
      In economics, a public good is a good that is non-rival and non-excludable. Non-rivalry means that consumption of the good by one individual does not reduce availability of the good for consumption by others; and non-excludability means that no one can be effectively excluded from using the good...

    • Inadequate information
      Information
      Information in its most restricted technical sense is a message or collection of messages that consists of an ordered sequence of symbols, or it is the meaning that can be interpreted from such a message or collection of messages. Information can be recorded or transmitted. It can be recorded as...

    • Unseen externalities
      Externality
      In economics, an externality is a cost or benefit, not transmitted through prices, incurred by a party who did not agree to the action causing the cost or benefit...

  • Collective desires - regulation about collective desires or considered judgments on the part of a significant segment of society
    Society
    A society, or a human society, is a group of people related to each other through persistent relations, or a large social grouping sharing the same geographical or virtual territory, subject to the same political authority and dominant cultural expectations...

  • Diverse experiences - regulation with a view of eliminating
    Censorship
    thumb|[[Book burning]] following the [[1973 Chilean coup d'état|1973 coup]] that installed the [[Military government of Chile |Pinochet regime]] in Chile...

     or enhancing
    Sensitivity training
    Sensitivity Training is a form of training that claims to make people more aware of their own prejudices, and more sensitive to others. According to its critics, it involves the use of psychological techniques with groups that its critics, e.g. G. Edward Griffin, claim are often identical to...

     opportunities for the formation of diverse preferences and beliefs
  • Social subordination - regulation aimed to increase or reduce
    Reverse discrimination
    Reverse discrimination is a controversial term referring to discrimination against members of a dominant or majority group, including the city or state, or in favor of members of a minority or historically disadvantaged group such as African Americans being slaves. Groups may be defined in terms of...

     social subordination of various social groups
  • Endogenous
    Endogenous
    Endogenous substances are those that originate from within an organism, tissue, or cell. Endogenous retroviruses are caused by ancient infections of germ cells in humans, mammals and other vertebrates...

     preferences - regulation's purpose is to affect the development of certain preferences on an aggregate level
  • Irreversibility
    Irreversibility
    In science, a process that is not reversible is called irreversible. This concept arises most frequently in thermodynamics, as applied to processes....

     - 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
    Professional conduct
    Professional conduct is the field of regulation of members of professional bodies, either acting under statutory or contractual powers.Historically, professional conduct was wholly undertaken by the private professional bodies, the sole legal authority for which was of a contractual nature...

     - 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
Sociology of law
The sociology of law is often described as a sub-discipline of sociology or an interdisciplinary approach within legal studies...

. 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
Ancient history
Ancient history is the study of the written past from the beginning of recorded human history to the Early Middle Ages. The span of recorded history is roughly 5,000 years, with Cuneiform script, the oldest discovered form of coherent writing, from the protoliterate period around the 30th century BC...

 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
Ancient Rome
Ancient Rome was a thriving civilization that grew on the Italian Peninsula as early as the 8th century BC. Located along the Mediterranean Sea and centered on the city of Rome, it expanded to one of the largest empires in the ancient world....

. In the European Early Middle Ages
Early Middle Ages
The Early Middle Ages was the period of European history lasting from the 5th century to approximately 1000. The Early Middle Ages followed the decline of the Western Roman Empire and preceded the High 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 contract
Contract
A contract is an agreement entered into by two parties or more with the intention of creating a legal obligation, which may have elements in writing. Contracts can be made orally. The remedy for breach of contract can be "damages" or compensation of money. In equity, the remedy can be specific...

s.

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
Administrative law
Administrative law is the body of law that governs the activities of administrative agencies of government. Government agency action can include rulemaking, adjudication, or the enforcement of a specific regulatory agenda. Administrative law is considered a branch of public 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
Interstate Commerce Commission
The Interstate Commerce Commission was a regulatory body in the United States created by the Interstate Commerce Act of 1887. The agency's original purpose was to regulate railroads to ensure fair rates, to eliminate rate discrimination, and to regulate other aspects of common carriers, including...

 which had its roots in earlier state-based regulatory commissions and agencies. Later agencies include the Federal Trade Commission
Federal Trade Commission
The Federal Trade Commission is an independent agency of the United States government, established in 1914 by the Federal Trade Commission Act...

, 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
Organic law
An organic or fundamental law is a law or system of laws which forms the foundation of a government, corporation or other organization's body of rules. A constitution is a particular form of organic law for a sovereign state....

 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
Regulatory capture
In economics, regulatory capture occurs when a state regulatory agency created to act in the public interest instead advances the commercial or special interests that dominate the industry or sector it is charged with regulating. Regulatory capture is a form of government failure, as it can act as...

, which led to extremely detailed laws creating the Environmental Protection Administration and Occupational Safety and Health Administration
Occupational Safety and Health Administration
The United States Occupational Safety and Health Administration is an agency of the United States Department of Labor. It was created by Congress of the United States under the Occupational Safety and Health Act, signed by President Richard M. Nixon, on December 29, 1970...

. 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.
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According to the Small Business Administration
Small Business Administration
The Small Business Administration is a United States government agency that provides support to entrepreneurs and small businesses. The mission of the Small Business Administration is "to maintain and strengthen the nation's economy by enabling the establishment and viability of small businesses...

 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
Deregulation
Deregulation is the removal or simplification of government rules and regulations that constrain the operation of market forces.Deregulation is the removal or simplification of government rules and regulations that constrain the operation of market forces.Deregulation is the removal or...

 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
Office of Information and Regulatory Affairs
The Office of Information and Regulatory Affairs is an office of the United States Government that Congress established in the 1980 Paperwork Reduction Act. OIRA is located within the Office of Management and Budget, which is an agency within the Executive Office of the President...

, and the United Kingdom's Better Regulation Commission. Cost-benefit analysis
Cost-benefit analysis
Cost–benefit analysis , sometimes called benefit–cost analysis , is a systematic process for calculating and comparing benefits and costs of a project for two purposes: to determine if it is a sound investment , to see how it compares with alternate projects...

 is frequently used in such reviews. In addition, there have been regulatory innovations, usually suggested by economists, such as emissions trading
Emissions trading
Emissions trading is a market-based approach used to control pollution by providing economic incentives for achieving reductions in the emissions of pollutants....

. 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).

See also

  • Sociology of law
    Sociology of law
    The sociology of law is often described as a sub-discipline of sociology or an interdisciplinary approach within legal studies...

  • Bootleggers and Baptists
    Bootleggers and Baptists
    Bootleggers and Baptists, is a model of politics in which opposite moral positions lead to the same vote. Specifically, preachers demand prohibition to make alcohol illegal while the criminal bootlegger wants it to stay illegal so he can stay in business...

  • Code of Federal Regulations
    Code of Federal Regulations
    The Code of Federal Regulations is the codification of the general and permanent rules and regulations published in the Federal Register by the executive departments and agencies of the Federal Government of the United States.The CFR is published by the Office of the Federal Register, an agency...

  • Constitutional economics
    Constitutional economics
    Constitutional economics is a research program in economics and constitutionalism that has been described as extending beyond the definition of 'the economic analysis of constitutional law' in explaining the choice "of alternative sets of legal-institutional-constitutional rules that constrain the...

  • Delegated legislation
    Delegated legislation
    In the United Kingdom, delegated legislation is legislation or law that is passed otherwise than in an Act of Parliament . Instead, an enabling Act confers a power to make delegated legislation on a Government Minister or another person or body...

  • Development approvals
    Development approvals
    Development approvals is a general reference to the broad suite of regulatory approvals that must be obtained prior to commencing a development. With few exceptions, all development activities are subject to Regulation through-out the world's soveriegn juridictions...

  • Federal Register
    Federal Register
    The Federal Register , abbreviated FR, or sometimes Fed. Reg.) is the official journal of the federal government of the United States that contains most routine publications and public notices of government agencies...

  • Public administration
    Public administration
    Public Administration houses the implementation of government policy and an academic discipline that studies this implementation and that prepares civil servants for this work. As a "field of inquiry with a diverse scope" its "fundamental goal.....

  • Public choice theory
    Public choice theory
    In economics, public choice theory is the use of modern economic tools to study problems that traditionally are in the province of political science...

  • Regulator (disambiguation)
  • Rulemaking
    Rulemaking
    In administrative law, rulemaking refers to the process that executive and independent agencies use to create, or promulgate, regulations. In general, legislatures first set broad policy mandates by passing statutes, then agencies create more detailed regulations through rulemaking.By bringing...

  • Rule of law
    Rule of law
    The rule of law, sometimes called supremacy of law, is a legal maxim that says that governmental decisions should be made by applying known principles or laws with minimal discretion in their application...

  • Rule According to Higher Law
    Rule according to higher law
    The rule according to a higher law means that no written law may be enforced by the government unless it conforms with certain unwritten, universal principles of fairness, morality, and justice...

  • Regulatory capture
    Regulatory capture
    In economics, regulatory capture occurs when a state regulatory agency created to act in the public interest instead advances the commercial or special interests that dominate the industry or sector it is charged with regulating. Regulatory capture is a form of government failure, as it can act as...

  • Cybernetics
    Cybernetics
    Cybernetics is the interdisciplinary study of the structure of regulatory systems. Cybernetics is closely related to information theory, control theory and systems theory, at least in its first-order form...


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