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Guiding Principles For Regulatory Quality and Performance

Introduction: What Is Regulation—and How Can Regulatory Policies Work to Work Well?

Regulation is a major way in which government influences the U.S. market economy. The scope of government regulations is vast and reaches all sectors of the economy and all aspects of our daily lives. But what exactly is regulation?

The Merriam-Webster dictionary provides this very general and simple definition of regulation: an official rule or law that says how something should be done1

Regulatory policy scholars Susan Dudley2 and Jerry Brito elaborate on that definition this way:

Regulations, also called administrative laws or rules, are the primary vehicles by which the federal government implements laws and agency objectives. They are specific standards or instructions concerning what individuals, businesses, and other organizations can or cannot do.

Market economies need clear rules to function efficiently. Without a legal framework establishing and enforcing property rights and the “rules of the game,” our free enterprise system could not exist. Regulations issued by the executive branch affect every aspect of our lives. From the moment you wake up until the time you go to sleep, regulations influence what you do. Yet most people know very little about the impact of regulations or the process by which they are produced.3

Recently, the international Organisation for Economic Co-operation and Development (OECD) has done considerable research on regulatory policy. Their overarching perspective is that regulations are often necessary for a well-functioning, market-based, capitalist society, but they do not always live up to public expectations or achieve their social goals. In other words, regulations in practice do not always make things better