Regulation is the management ofcomplex systems according to a set of rules and trends. Insystems theory, these types of rules exist in various fields ofbiology andsociety, but the term has slightly different meanings according to context. For example:
Regulation in the social, political, psychological, and economic domains can take many forms:legal restrictions promulgated by agovernment 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 implementpolicy 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 environmentalpollution, laws against child labor or otheremployment 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 anddevelopment approvals regulation. Much less common are controls on market entry, orprice 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] Theeconomics of imposing or removing regulations relating tomarkets is analysed in empirical legal studies, law and economics, political science, environmental science,health economics, andregulatory 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]
Regulation can be assessed for different countries through various quantitative measures. The Global Indicators of Regulatory Governance[10] byWorld Bank's Global Indicators Group scores 186 countries on transparency around proposed regulations, consultation on their content, the use of regulatory impact assessments[11] and the access to enacted laws on a scale from 0 to 5. TheV-Dem Democracy indices include the regulatory quality indicator.[12] The QuantGov project[13] at theMercatus Center tracks the count of regulations by topic for United States, Canada, and Australia. The length ofCode of Federal Regulations of the United States increased over time.[14]
Regulation of businesses existed in theancient 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 inAncient Rome. In the EuropeanEarly 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 regardingcontracts.[15]: 5
Modern industrial regulation can be traced to theRailway 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 byregulatory agencies which produced their ownadministrative law and procedures under the authority of statutes. Legislators created these agencies to require experts in the industry to focus their attention on the issue. At the federal level, one of the earliest institutions was theInterstate Commerce Commission which had its roots in earlier state-based regulatory commissions and agencies. Later agencies include theFederal 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 clearlife-cycles or patterns of behavior, and they are influenced heavily by their leadership and staff as well as theorganic 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 toregulatory capture, which led to extremely detailed laws creating theUnited States Environmental Protection Agency andOccupational Safety and Health Administration.
