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Strategy and Regulatory Frameworks

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As policy objectives change, so do regulatory institutions and the ... Distributive and Social Justice. Market Failure. Types of Market Failure. Public Goods. ... – PowerPoint PPT presentation

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Title: Strategy and Regulatory Frameworks


1
Strategy and Regulatory Frameworks
  • Kevin Hinde

2
Introduction
  • The history of regulation is one of shifting
    emphasis and focus of government activities. As
    policy objectives change, so do regulatory
    institutions and the particular markets subject
    to regulation. ... Thus, while specific
    regulatory policies may come and go, the form and
    structure of regulation may be expected to retain
    familiar characteristics Spulber 1989

3
Introduction
  • Regulations dominate all aspects of our private
    and organisational lives and we have to work with
    regulatory environments and the policies that
    shape future rules, laws and regulatory
    institutions.
  • The world is constantly changing and
    organisations need to understand regulatory
    frameworks in order to formulate and implement
    strategies.

4
Strategy, Policy and Regulation
  • Strategy is concerned with organisational policy
    to achieve a given end.
  • Political strategy is concerned with a Government
    policy to achieve a given end.
  • Regulation represents rules and laws associated
    with the aggregation of past and current policies
    at the industry, sector and/or spatial level that
    is monitored by some agency.

5
A Definition of Regulation
  • any government measure or intervention that
    seeks to change the behaviour of individuals or
    groups. Government regulation can both promote
    the rights and liberties of citizens, and impose
    restrictions on their behaviour. UK Better
    Regulation Unit, 2000
  • refers to the various instruments (both formal
    legal instruments and such informal tools as
    guidance) used by government to control some
    aspect of the behaviour of a private economic
    actor. Regulation can also include rules issued
    by non-governmental bodies (e.g. self-regulatory
    bodies) to which governments may have delegated
    regulatory powers. All regulations are supported
    by the explicit threat of punishment for
    non-compliance. OECD, 2001.

6
Types of regulations
  • Economic (Structural) Regulation
  • Social (Conduct) Regulation
  • Administrative Regulation

7
Why might we regulate?
  • Planning
  • Natural Monopoly
  • Distributive and Social Justice
  • Market Failure

8
Types of Market Failure
  • Public Goods.
  • Externalities.
  • Information Asymmetries.
  • Market Dominance and the Abuse of a Dominant
    Position.

9
How much regulation?
  • should occur as long as the marginal benefits
    equal the marginal costs of intervention, but the
    data problems involved are enormous.
  • Competition where possible, regulation where
    necessary. A political Judgement?
  • It should look to improve allocative, productive
    and dynamic economic efficiency.
  • Does this always require the state? How about
    self-regulation?
  • What of other regulatory strategies?

10
Principles of good regulation
  • Independence
  • Accountability
  • Transparency
  • Clarity
  • Speed
  • Appeals Procedure
  • Simplicity
  • Periodic Review
  • Consistency
  • Commitment
  • Fairness
  • Targeted

11
Some potential benefits of good regulation
  • Overall Consumer Gains
  • In Japan, efficiency gains from reform are
    boosting consumer income by about 0.3 per cent
    per year, or 36 billion.
  • In the United States, reform in several sectors
    provides annual benefits to consumers and
    producers of an estimated 42 billion to 54
    billion.

12
Why should organisations bother about regulation?
  • It provides environmental context in which to
    formulate strategy.
  • It can be a source of advantage in strategic
    positioning.
  • It can be a barrier to development which needs
    addressing via lobbying.
  • It can be an opportunity to shape the future
    environment.
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