Regulatory Abdication in Practice

10 Pages Posted: 12 Feb 2020

See all articles by Cary Coglianese

Cary Coglianese

University of Pennsylvania Law School

Date Written: February 7, 2020

Abstract

“Meta-regulation” refers to deliberate efforts to induce private firms to create their own internal regulations—a regulatory strategy sometimes referred to as “management-based regulation” or even “regulation of self-regulation.” Meta-regulation is often presented as a flexible alternative to traditional “command-and-control” regulation. But does meta-regulation actually work? In her recent book, Meta-Regulation in Practice: Beyond Normative Views of Morality and Rationality, Fiona Simon purports to offer a critique of meta-regulation based on an extended case study of the often-feckless process of electricity regulatory reform undertaken in Australia in the early part of this century. Yet neither Simon’s case study nor her book overall succeeds in undermining the rationale for using meta-regulation.

In this review essay, I highlight the many limitations of Simon’s argument. I show how, in making existing scholarship her foil, Simon mischaracterizes what regulatory scholars have had to say about meta-regulation. Not only does Simon misleadingly make scholars out to be naïve and overly optimistic about what can be expected from meta-regulation, but she also ignores entirely the peer-reviewed empirical research that shows that meta-regulation can work. She also misstates what existing work has to say about the mechanisms that can make meta-regulation effective. The most significant problem with Simon’s book, though, is that the case study she presents in her effort to criticize meta-regulation theory does not actually describe a strategy based on meta-regulation. Rather, it shows Australian electricity regulators as passive, defensive, and weak. What Simon’s book actually offers is a detailed case study of regulatory abdication in practice.

Keywords: government regulation, management-based regulation, enforced self-regulation, process regulation, law and economics, electric utility restructuring, infrastructure, reform, Australia, voluntary programs, public interest, incentives, regulatory capture

JEL Classification: K23, L94, L98

Suggested Citation

Coglianese, Cary, Regulatory Abdication in Practice (February 7, 2020). U of Penn, Inst for Law & Econ Research Paper No. 20-11, Available at SSRN: https://ssrn.com/abstract=3535895 or http://dx.doi.org/10.2139/ssrn.3535895

Cary Coglianese (Contact Author)

University of Pennsylvania Law School ( email )

3501 Sansom Street
Philadelphia, PA 19104
United States
215-898-6867 (Phone)

HOME PAGE: http://www.law.upenn.edu/coglianese

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