Understanding the Global Regulatory Process
Edited by Francesca Bignami and David Zaring
Chapter 15: Performance-based regulation: concepts and challenges
Around the world, one of the most persistent and widespread complaints made about government regulation has been that it is too constraining. Often referred to pejoratively with the adjective “command-and-control,” regulation is frequently criticized as costly and unreasonable (e.g., Bardach and Kagan, 1982; Howard, 1994). Such objections are loudest when rules inflexibly require every regulated entity to take the same actions—or adopt the same technological fixes—even if under some circumstances, or for some entities, the required action or technology might be expensive, ineffectual, or even counterproductive. Those objecting to inflexible regulation believe that the better approach is to adopt performance-based regulation. Instead of telling businesses exactly what technologies they must use to address public problems, government should establish binding performance or outcome goals, leaving it up to regulated firms to figure out how to achieve the specified outcomes or level of performance. Such a performance-based approach to regulation has many adherents around the world. In the United States, both Republican and Democratic administrations have expressed a preference for the use of performance standards. For example, in 1993 President William Clinton directed federal regulatory agencies to try to “specify performance objectives, rather than specifying the behavior or manner of compliance that regulated entities must adopt.”
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