What are the advantages and disadvantages of different regulatory approaches?

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pohnpei397 eNotes educator| Certified Educator

It would be easier to give you a precise answer if you can tell us what area of regulation you are asking about or if you can in some way give us more information about the question.  As it is, this could be answered in a number of ways.

One regulatory approach is to make detailed rules that tell firms what they must do.  This approach has the advantage of allowing the government to specify the exact outcomes it wants and the way it wants those outcomes achieved.

Another regulatory approach is more market-oriented.  An example of this would be imposing a carbon tax and letting businesses decide how they wanted to reduce their emissions in response.  This one does not allow the government to be in control as much, but it can be more efficient because it allows firms to innovate to find ways to improve their processes.  This tends to be better than trying to have government officials decide the best way to do things.

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