Regulatory Equilibrium and the Implementation of a Regulatory Budget

The term regulatory equilibrium has its roots in the writings of George Stigler who coined the term capture theory to describe regulation in which the regulators did what the producers wanted and ignored consumers. Later writers such as Porter  argued that capture was never perfect and instead regulators balanced pressure from both consumers and industry not just industry.

Regulatory equilibrium exists when neither consumers nor industries can dominate the aforementioned process—a détente if you please. It is for this reason that from the standpoint of regulatory equilibrium when one reviews legislative proposals to control the regulatory state  that policy neutral mechanisms score the highest.  A regulatory budget is an excellent representative of establishing a mechanism  congruent with regulatory equilibrium because it can be used to increase, decrease or not change the size of the regulatory state.

A regulatory budget contributes to a global regulatory equilibrium because it forces an equitable  balancing of power between the Executive and Congress.




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