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In a host of areas national regulators play only a limited role in dealing with issues, risks, and problems. Issues have to be dealt with in complex networks comprising not only regulators at different levels of government but also non-state bodies. When regulation is conducted by means of such complex networks, special challenges arise in discharging the key tasks of setting objectives, delivering outcomes, and satisfying representative values. This chapter focuses on transnational regimes, which tend to involve more complex networks than domestic systems. However, even when risks and problems are more distinctly located within national boundaries, many of the challenges are echoed when national regulators operate within control regimes that are polycentric and involve networks of bodies that are located at different levels of government (local, regional, national, and supra-national), that have different characteristics (public, private, state, non-state) and exert different kinds of influence (binding, non-binding). The challenges and advantages of ‘networked’ regulation are discussed.

All regulators deal with issues that are constantly changing. Economic circumstances and technologies develop, and market structures alter as new products are launched, providers come and go, consumer preferences shift and so on. Positive regulators will be aware of such changes (anticipating them when feasible), will have information on the nature of such changes, and will respond dynamically to any such shifts. This chapter focuses on three central strategic issues in doing so: how best to respond to those new activities, technologies, and operators that do not sit easily within current regulatory frameworks; how to encourage healthy innovations by businesses; and how regulatory regimes can be adjusted in ways that impose least costs on firms, consumers, and others. Special attention is paid to the challenges that arise when regulation operates in a fragmented manner and across different levels of government.

Regulators have to ensure their activities will actually influence behaviour on the ground. This chapter looks at the possible enforcement methods and the impacts these tend to have on interested parties. It outlines how to choose the least intrusive intervention styles that are acceptable. Positive regulatory enforcement demands attention to the stage at which interventions are made and to opportunities to encourage firms’ capacities to comply voluntarily with regulations. Enforcement actions revolve around two key issues—who to go after and what to do to change behaviour. Risk-based regulation offers a way of prioritizing targets for attention but is infused with qualitative judgements and does not assist greatly on choices of intervention strategy. Collectively, ‘compliance’, ‘deterrence’, and ‘responsive’ approaches do not go so far as the GRID approach in combining attention to two needs: matching intervention tools to firm-types and taking on board both the levels of risks and their volatility.

Sustainability is an urgent concern that grows in importance as the earth’s fragility becomes increasingly apparent. Regulating in order to promote sustainability, however, brings a number of challenges. The first section of this chapter discusses those general challenges and the second section deals with a specific issue of central importance to sustainability—the control of carbon emissions. Central questions explored include: Is the idea of sustainability too elusive to allow its protection through regulation? How can regulators address the special challenges presented by future and contested harms? What strategies are available to rise to the challenges of regulating so as to foster sustainability? The discussion of responses to carbon and other greenhouse gases deals with the scale of the problems and the regulatory tools available to achieve the decarbonization targets now adopted by governments, including carbon taxes, tradable emissions permits, electric vehicles, and the replacement of gas in home heating.

This chapter focuses on the century-old regulatory challenge that is posed by a key feature of traditional utility sectors such as energy, fixed telephony, and water: their reliance on a physical (not a digital) local distribution network for delivering the relevant service to millions of dwellings and business premises, and the incorporation of bottlenecks within such networks. Key issues explored include the scope of regulation within a network utility, how network prices are regulated, minimizing network costs and regulating outputs more broadly, how to set the rate of return on capital allowed to the network, and the future of network regulation.

What is regulatory success and how is it to be achieved across the core tasks of regulation? There are familiar examples of regulatory systems that seem to have failed—the financial crash of 2009 offers an instance of a hugely costly failure of regulation and government. What, though, does successful regulation look like? This chapter looks at the challenges involved in producing regulatory systems that achieve success for affected parties. It outlines the jobs that regulators have to do and the difference made by doing these well or badly. It examines why regulation can fail and describes the qualities associated with the excellent regulators. It sets down how businesses can respond to regulatory systems in an effective manner and looks at the conditions under which ‘win-win’ outcomes are possible for firms and regulators.

This chapter summarizes the book’s argument for taking a positive approach to regulation and for seeing regulation as part of the core process for furthering both business success and social welfare. If regulation is to develop in a way that meets future needs, as well as current ones, it will be necessary to develop the key attributes of positive regulation. This involves a predisposition to maximize the degree to which objectives (substantive and procedural) can be achieved by harnessing corporate capacities to behave well. Such a minimalist approach to ‘taming the corporation’ implies that enabling and flexible modes of influence should be the first choices of regulators, rather than restrictive control mechanisms. Realism, however, demands that regulators take on board the inclinations and capacities of regulated firms to behave well and that they act firmly with corporations and individuals who are not likely to deliver desired outcomes without strong forms of external stimulation.

One of the most pressing regulatory challenges of recent years has been what to do about the hugely successful digital platform and related companies which now bestride the world. Their emergence provides a brutal and urgent test for positive regulation: Can legislators and regulators maintain the benefits generated by such influential new actors, but also control the adverse effects? This chapter focuses on the challenges posed by the platforms’ abuses of their market power. It starts with an exposition of the special features of two-sided platforms which may create a heightened or special need for regulation. It then considers how these features might play out, and focuses on the risk of markets ‘tipping’ into monopolies. It then discusses how general competition law might be strengthened to keep up with the new dynamics of digital platforms and how competition law can be supplemented by additional regulatory interventions. The concluding section discusses prospects for positive regulation meeting these new challenges.

This chapter suggests that regulators suffer from systematic failures through a lack of awareness, intelligence, and dynamism, as well as an inability to deliver on the key tasks of regulation. A central way for a positive regulator to reduce failures is to examine its organizational culture in the face of changing circumstances, to avoid capture, and to address cognitive failures by engaging in counter-measures that are designed to improve the intelligence system that underpins action, and to ensure that regulatory decisions are made on the basis of the soundest available evidence. When regulators develop their awareness and intelligence systems, this increases their self-reflection and consciousness of their own fallibility, which can reduce the likelihood that mistakes will be made or repeated. Similarly, an emphasis on dynamism fosters the more agile regulatory systems that are especially needed in sectors marked by rapid technological and other changes.

This paper stresses the importance of political as well as economic factors for understanding negotiating outcomes in multilateral trade negotiations such as the Doha Round. In particular, it is argued that economic factors of the type traditionally emphasized by economists in their classrooms are by themselves inadequate for analysing the negotiating process. A variety of political economy factors are discussed as explanations for the disappointing results of the Doha Round.

A basic relationship of the standard general equilibrium trade model relating product-price changes to factor-price changes is used - together with other economic relationships based on this model - to investigate empirically the importance of changes in trade, technology, and factor endowments in accounting for the shifts in relative wages of less-educated workers compared to more-educated workers from 1967 to 1996. In the early part of the period when wage inequality decreased, the dominant explanatory factor seems to have been a relative increase in the supply of highly educated labor. However, since the late 1970s, none of the three economic forces considered can alone account for the observed changes in relative wages, prices, outputs, net exports, and factor-use ratios. In particular, both education-biased technical progress that was greater in industries that intensively used more-educated labor and increased import competition in industries that intensively used less-educated labor seem to have played important roles in bringing about the increase in wage inequality during the 1980s and 1990s. © 2000 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology

In the idealised economic world in which economists usually begin their theoretical analyses, the first-best international policy for dealing with dumping is to eliminate the economic distortions that make dumping possible, e.g., tariffs, subsidies and monopoly power, and deal with relevant equity considerations through lump-sum income redistribution. But this combination of policies generally is not politically feasible, and the use of second-best policies is the only realistic option. Consequently, for academic economists seeking achievable AD reform, the most promising approach may be to work toward the elimination of the many current administrative practices that unfairly injure groups not directly involved in the petitioning process but accept that there can be practical circumstances where the equity concerns of petitioners trump overall efficiency objectives.

Trade liberalization is puzzling from the perspective of standard political economy models. Why would a government find it optimal to remove protection that it previously found optimal to impose? This paper reviews two types of approaches to answering this question: Approaches that view liberalization driven by strenghtened anti-protection forces, and approaches that view liberalization driven by an erosion of pro-protection forces.

An Analysis of ITC Decisions in Antidumping, Countervailing Duty and Safeguard Cases. — This paper investigates the economic factors that best explain the decisions of the International Trade Commission in administering the injury provisions of U.S. antidumping, countervailing duty, and safeguard laws during the 1980s. Utilizing the economic data collected by the Commission for each investigation, it attempts to ascertain through regression analysis how strictly the commissioners have been interpreting these laws in recent years in terms of the economic conditions required for finding that an industry has been injured and for establishing a casual relationship between imports and this injury.

Recent analysis of trade policies under imperfectly competitive market conditions as well as in situations where trade in high-technology products is important have raised doubts whether economists should continue their traditional opposition to trade taxes and subsidies. This paper evaluates the new theoretical arguments for interventionist trade policies by comparing them with the traditional arguments for and against free trade, investigating the empirical evidence supporting the conditions assumed in the new models, appraising the realism of the behavior assumptions of these models and the sensitivity of their conclusions to changes in these assumptions, and considering the political economy implications of these conclusions. The general conclusion is that there are serious practical difficulties with the interventionist arguments of the 'new' trade theorists, as they themselves recognize, just as there are with such traditional arguments for trade intervention as the terms-of-trade case for protection. However, the new industrial organization approach to trade theory has already provided valuable insights into trade behavior in international markets and promises to provide many more as more realistic behavior models are developed.

This paper presents a comprehensive but relatively brief historical survey of U.S. trade-policy over the last 75 years. It is aimed at individuals who are not already familiar with the concepts and terminology used in discussions of trade policy and the domestic and international institutional framework within which U.S. trade policies are formulated and implemented. Particular attention is devoted to exploring the underlying economic and political conditions that have shaped U.S. trade policies over the period.

Until negotiations collapsed in early December, the Uruguay Round gave promise of being the most significant multilateral trade negotiation since 1947, when the General Agreement on Tariffs and Trade (GA TI) was implemented and tariffs levels of the industrial countries were sharply cut. There are at least three reasons for this conclusion. First, by agreeing at the outset to bring both agriculture and textiles under GATT discipline, the participants created the opportunity for both rich and poor agricultural exporting nations and relatively low-wage, newly industrializing LDCs to benefit significantly from GATT-sponsored trade negotiations. Prior to the Uruguay Round, the benefits to these countries of such negotiations had been limited, since these two sectors were excluded from any significant liberalization. Second, by agreeing to formulate new rules relating to trade in services, trade-related aspects of· intellectual property rights, and trade-related investment issues, members took an important step in modernizing the GATT. As economic globalization has accelerated, there is a growing realization that arms-length merchandise transactions, the traditional concern of the GATT, are only one aspect of the real-side economic relations of current concern to national policy-makers and the economic interests they represent Now international commercial activities also involve merchandise trade among multinational firms and their foreign affiliates, international trade in services among independent agents as well as among affiliated enterprises, foreign direct investment activities, production nf goods and services in foreign affiliates for sale either abroad or at home, international flows of technology, and temporary movements of labour across borders. Although the so-called new issues in the Uruguay Round do not cover all of these matters, they go a considerable way in making the GATT more relevant for dealing with the problems of increasing internationalization.