Regulation

A regulation is a legal norm intended to shape conduct that is a byproduct of imperfection. A regulation may be used to prescribe or proscribe conduct (“command-and-control” regulation), to calibrate incentives (“incentive” regulation), or to change preferences (“preferences shaping” regulation”). In statist mechanisms it can also be extended to monitoring and enforcement of rules as established by primary and/or delegated legislation. In this form, it is generally a written instrument containing rules having the force of statist law (as opposed to natural law). Other forms of regulation are self regulation. In general, regulations are written by executive agencies as a way to enforce laws passed by the legislature. Because of the actual or potential interference in choices, the idea of regulation and most issues related to regulation tend to be in controversy. Regulation creates, limits, constrains a right, creates or limits a duty, or allocates a responsibility. Regulation can take many forms: legal restrictions promulgated by a government authority, contractual obligations that bind many parties (for example, “insurance regulations” that arise out of contracts between insurers and their insureds), self-regulation by an industry such as through a trade association, social regulation (e.g. norms), co-regulation, third-party regulation, certification, accreditation or market regulation. In its legal sense regulation can and should be distinguished from primary legislation (by Parliament of elected legislative body) on the one hand and judge-made law on the other. 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.