Question

Distinguish between economic regulation and social regulation. What were the original objectives of regulation, and which historical factors have shaped the development of regulation? What are the principal arguments on both sides of the historical debate about regulation?

Answer 1

A :- difference between economic regulation and social regulation

Economic regulation is defined as a type of government regulation that sets price or conditions on entry of firms into an industry.economic regulation also include the regulation of financial firms.two types of economic regulation can be distinguished:- structural regulation and conduct regulation.structueal regulation concerns the regulation of the market structure. Example are restrictions on entry and exit. Conduct regulation is used to regulate the behaviour of producer and consumers in the market. Example are price controls rules against advertising. Economic regulation is mainly exercised on so- called natural monopolies and market structure with imperfect or excessive competition.the aim is to counter the negative welfare effects of dominant firm behaviour.Examples of economic regulation are FCC ( federal communication comission ) , FRS ( federal reserve system ),SEC etc.

Social regulation is all about correcting failure of the legal system- mainly liability and tort law - to prevent harms or to promote positive ends.these usually arise from ffailures in the market.social regulation are basically for welfare, public safety, Medicaid. Social regulation include environment controls, health and safety regulations, and restrictions on labeling and advertising.social regulation involves the correction of externalities. However, there is considerable disagreement about the exact economic rationale for much social regulation. Social regulation comprises regulation in the area of environment, occupational health and safety. IInstrument applied here include regulation dealing with the discharge of environmentally harmful substances, safety regulations in factories and workplaces, the obligation to include information on the packaging of goods or on labels. Example :- CPSC ( consumer product safety commission ), FDA ( food and drug administration ), FAA ( federal aviation administration ),EPA,OSHA etc.

B:- objective of regulation

Regulation are enforced usually by a regulatory agency formed or mandated to carry out the purpose or provision of a legislation.also called regulatory requirement.the objective of social regulation is social activity, education initiative, emergency services, family services, healthcare, public works. The objective of economic regulation is capital investment, employment, production, consumption, innovative technologies, redistribution etc.