Transcript Strategy and Regulatory Frameworks

Strategy and Regulatory
Frameworks
Kevin Hinde
Introduction
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“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
Introduction
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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.
Strategy, Policy and Regulation
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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.
A Definition of Regulation
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“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
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“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.
Types of regulations
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Economic (Structural) Regulation
Social (Conduct) Regulation
Administrative Regulation
Why might we regulate?
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Planning
Natural Monopoly
Distributive and Social Justice
Market Failure
Types of Market Failure
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Public Goods.
Externalities.
Information Asymmetries.
Market Dominance and the Abuse of a
Dominant Position.
How much regulation?
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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 selfregulation?
What of other regulatory strategies?
Principles of good regulation
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Independence
Accountability
Transparency
Clarity
Speed
Appeals Procedure
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Simplicity
Periodic Review
Consistency
Commitment
Fairness
Targeted
Some potential benefits of good
regulation
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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.
Why should organisations bother
about regulation?
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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.