This is an extensive summary of the book Managing Regulation - Regulatory Analysis, politics and policy by Martin Lodge & Kai Wegrich. This book is part of the curriculum for the master of Public Administration - Economics and Governance track at Leiden University.
Samenvatting – boek Managing Regulation
Chapter 1 – What is Regulation?
Regulation involves three key aspects:
- Standard-setting (the rule)
This sets out the target, the objectives and the way in which these objectives are to be
followed. It also includes the choice of agents to conduct regulatory activities (state-based
agency or self-regulatory bodies).
- Behaviour-modification
The way in which rules are complied with and enforced (advice, persuasion, punishment)
- Information-gathering
The way in which regulators inspect and monitor activities, requiring regulatees to provide
information
We need to consider regulation from a regulatory regime perspective: regulation is inherently about
the functioning of standards-setting, behavior-modification, and information-gathering.
An extensive definition of regulation:
- regulatory power is to be found not just in the formal representations of regulation, that is,
government offices and regulatory authorities, but in all controlling devices, such as property rights,
international relations and other means that stabilize particular modes of production.
Narrow definition of regulation: a specified set of legal commands. Regulation includes all forms of
legal authority. This might be too narrow.
The authors treat regulation in the broad sense of all forms of intentional use of authority by state
and non-state actors to affect a different party, involving all three regulatory regime components.
Authority includes the use of formal legal force as well as informal understandings and conventions.
Who regulates?
Selznick tells about regulation: a sustained and focused control exercised by a public agency over
activities that are valued by a community.
This definition is too narrow because also private/ non-state organisations can make regulation.
Adding to that, multiple organizations can be involved in the three components of a regulatory
regime.
Why regulate?
This section briefly considers how regulatory activities have traditionallly been justified. These
justifications can be summarized in two types of rationales: market-based and social solidarities.
Market-based rationales
The justification is related to (solving) market failures through regulation. (imperfect markets).
- monopolies, negative externalities, information asymmetries, public goods & common pool
resources.
Social solidarity based rationales
Individual preferences are not the result of free choice but are based on the opportunities and
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