Regulation - for instance of consumer safety - is generally done by
mandating certain minimum standards of conduct.  One of the problems
of this is that if we value something - in this case consumer's being
treated honestly and well - then mandating minimum standards won't
improve the performance of those already performing at a satisfactory
standard.  It may obstruct poor performance but does nothing to
encourage excellence.

I'm looking for literature which cites specific attempts by regulators
to allow firms to opt out of 'bottom up' regulatory approaches to
encourage them to do far better than the minimum standards and for
literature which assesses the efficacy of this approach.

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Request for Question Clarification by pafalafa-ga on 30 Sep 2006 20:11 PDT

nicholasgruen-ga,

There is general agreement with your notion that regulations set a
minimum level, and the regulated community has little incentive to go
beyond the requirements.

Most of the efforts I am aware of to change this involve incentive or
voluntary programs, such as EPA's Project XL:


http://www.epa.gov/projectxl/file2.htm


XL dances around at the edges of regulation, but isn't itself, a
regulatory program.


Is something like this of interest?


pafalafa-ga

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Clarification of Question by nicholasgruen-ga on 03 Oct 2006 06:57 PDT

Yes, that's a useful reference.  But it looks like an 'alternative
compliance' regime - such that the regulated firm is invited to
propose alternative ways of exceeding the regulatory benchmarks.  This
is well and good, but I'm looking for something a little more than
this.  This exercise looks pretty low risk for the regulator because,
from what I read into the policy, the firm has to have everything in
place to demonstrate its outperformance and then the regulator will
give it a break.

I guess I'm talking about giving a wider berth to companies that have
demonstrated a degree of bona fides in their existing operations.