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There is a lot of interest in understanding what effects regulations have on economic growth and other macroeconomic measures, but measuring those impacts is challenging, in part because regulatory metrics themselves are rather blunt. Pages or even words in regulatory code may not tell the whole story. Intuitively, the form a regulation takes is relevant for predicting its impacts.
To address this information gap, as part of a cooperative agreement with the U.S. Department of Agriculture (USDA), the George Washington University Regulatory Studies Center is developing a taxonomy of regulatory forms. This framework allows regulations to be classified by the form (e.g. price or quantity caps, performance standards, information disclosure, etc.) they employ to achieve the stated regulatory outcomes. Although our initial goal is to use the taxonomy to estimate the impacts of regulation on agricultural industries in the U.S., we expect that the taxonomy can be used by researchers and analysts in a wide range of fields as a framework for informing research on the relative effectiveness of different regulatory forms to address market and social problems.
The Logic of a Regulatory Taxonomy
The peer-reviewed literature in regulation, economics, and individual policy fields all provides certain theoretical and empirical evidence for the intuition that some regulatory forms are likely to be more effective than others in achieving outcomes while minimizing disruption of market signals. In particular, research suggests that market-based alternatives to traditional “command-and-control” regulations, such as carbon taxes and emissions trading systems, have prominent theoretical advantages over stringent mandates for climate change. Others have shown that management-based regulations can be an effective strategy when regulated entities are heterogeneous and regulatory outputs are difficult to monitor.
Still, existing studies on different regulatory forms are limited in the sense that they mostly focus on a narrow scope that only provides understanding of a limited set of instruments (e.g. market-based vs. command-and-control regulations) in a limited policy field (e.g. environmental policy). One of the factors limiting the scope of this scholarship is the lack of a well-defined, widely-applicable catalog of different forms of regulation. Although there have been several attempts of building a taxonomy for this purpose, they either focus on an aggregated level of categorization or do not cover a complete list of forms. We believe that our taxonomy presented below is the first comprehensive taxonomy that can be used to classify regulations in any field into specific forms they take.