Chapter 7: Competing Theories of Regulatory Governance: Reconsidering Public Interest Theory of Regulation
Jørgen Grønnegård Christensen Regulation is one of the state’s core functions. It is also one of its classical functions. In a historical perspective the state engaged in regulation long before government also took on provision of welfare services to its citizens. Regulation defines the border between state and society, government and market. Therefore regulation represents government’s attempt to set limits to the scope of private activities. As broad as this conception is it has one important implication: If the government produces a good or service under its own auspices, for example by a state-owned enterprise or a public hospital, it is not reasonable to speak of regulation. But if a private firm provides the same service, say railroad transportation or hospital treatment within confines defined by legislation, we have to do with regulation. In other words the importance of regulation as an instrument of public policy is highly variable. It is amenable to change when the role of government is reconceived, as has happened with privatizations and pro-market reforms on the one hand and a dedicated effort to protect the environment on the other (Moran 2000). One of the most fruitful definitions of regulation was phrased by Barry Mitnick: “Regulation is the public administrative policing of a private activity with respect to a rule prescribed in the public interest” (Mitnick 1980: 7). The definition points to three central ideas: Regulation is restrictive and directed towards private activities; it rests on administrative controls undertaken on the basis of...
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