Regulatory reform involves creating, modifying, or repealing laws to regulate economic activity. Governments can use administrative agencies or pass laws to regulate. Advocates for more or less regulation exist in every sector. Regulatory reform can involve issuing more rules or repealing existing ones. Proponents of deregulation argue that it can increase profits and benefit the economy.
Regulatory reform is a concept that involves the renewal of the governmental structure of regulations, through the creation of new laws, the modification of existing ones or the repeal of existing ones. The motivation for such regulatory reform can be economic or to mitigate some sort of harm that results from the activity to be regulated. Depending on how the particular government is structured, regulatory reform may be done through an administrative agency that has been created by that government to address that specific issue or through the repeal or passage of laws. There are advocates on the side of advocating for more or less regulation in almost every sector.
Regulation by a government can be done in any area that can be governed within a nation. While it depends on the structure of government as to the actual method of regulation, the reach of a government generally extends to any economic activity conducted within that country. For example, a country’s government that authorizes the creation of administrative agencies to oversee a particular sector or group of industries may simply issue an order – often called a ruling – to influence how any private party under its supervision can act. In a country whose government does not employ the use of administrative agencies, its legislative body can pass laws to implement such regulatory reform.
Regulatory reform can go both ways: through issuing more rules or repealing existing rules. People most often advocate for more regulation in situations where there is a small group of people where economic power is concentrated or there are detrimental effects to the public. For example, antitrust laws that prohibit monopolistic activities and ensure competition in the market are a form of free market regulation. By limiting how much of a particular market a company can hold, the regulation seeks to prevent that company from exploiting consumers.
Proponents of deregulation – regulatory reform that involves the repeal of government rules – argue that if businesses are allowed to operate unrestricted by rules that do nothing but hinder the way they do business, they can make money more. Furthermore, if businesses earn more, this will have a positive effect on the economy as a whole. For example, regulations that require companies to limit their carbon emissions for the sake of the environment impose mandatory measures that can be costly, which reduces the profits of these companies.
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