Abstract
A theory of legislation must study the nature, the possibilities and the limitations of any given legislative policy, it must find out which are the regulatory instruments that are best suited to a specific community. It should do so by firstly answering whether the issue at stake can be regulated by the market through property rights, civil liability and contract law. Second, when the market fails in its regulatory task, a theory of legislation should provide a choice of other regulatory instruments, ranging from the provision of information to citizens, who can thus make their own decisions, to hard regulation. A regulatory policy will be all the richer and more effective when the operational regulatory instruments it provides are numerous and varied, when the objectives pursued by the regulation and the instruments used are attuned, and when the solution provided is accepted by society with as little coercion as possible. A good legislative technique has to take care, not only of the quality of the legal drafting, but also of the analysis of the legislative policy underpinning each draft—a policy which, ultimately, must be consistent with the constitution and the tasks it assigns to public authorities.
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UK Government (1993).
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Lowi (1968, 1970, 1972), on his part, classifies all the possible government actions in constitutive, distributive, redistributive and regulative policies. Constitutive policies are those by which public authority creates institutions and bodies and then establishes the necessary procedures for the production of all other public functions. Distributive policies are those that allocate land, subsidies or fees among citizens. Redistributive policies are used to manipulate the environment by giving or taking resources that strengthen or weaken the position of citizens. Regulatory policies have a targeted and direct impact in the behaviour of citizens by increasing or reducing the range of alternatives at their disposal. See also Gustavsson (1980).
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See Paz-Ares (1981, p. 636 ff). Cándido Paz-Ares’ important article—on which I largely draw in the next pages—offers an excellent discussion of the role that private law institutions (such as property rights , liability , and contracts) play within the economic analysis of law.
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Posner (2003, p. 230) sums it up like this: “In settings in which the cost of voluntary transactions is low, Common Law doctrines create incentives for people to channel their transactions through the market (be it implicit—like the marriage market for example—or explicit). They do this by creating property rights (broadly defined) and protecting them through remedies designed to prevent coerced transfers—remedies such as injunctions, restitutions, punitive damages and criminal punishment. In settings in which the cost of allocating resources by voluntary transactions is prohibitively high—where, in other words, market transactions are not feasible—the Common Law prices on behaviour in such a way as to mimic the market. For example, the tort system allocates liability for accidents between railroad and farmer, driver and pedestrian, doctor and patient (…) in such a way as to bring about the allocation of resources to safety that market would bring about if the market could me made to work. The law of contracts does the same thing in regard to unforeseen contingencies that may make it impossible to perform a contract: it places liability on the party better able either to prevent the contingency from occurring or to minimise the disutility of its occurrence by buying insurance or by self-insuring. The law of property does the same thing by limiting property rights in situations where insistence on an absolute right would prevent a value-maximizing exchange (…)—all to the end of facilitating the operation of the free market, and where the free market is unworkable of simulating its results”.
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For a distinction between reglamentation and regulation, see Bustamante (1993).
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For Mitnick (1989), a basic relation of incentives implies a whole series of operations and premises: the establishment of stimuli that are sent and received by the regulator and the regulated; the sent stimuli promise the recipient a reward; the stimuli are connected to the behaviour of the recipient; the recipient in fact behaves in response to the stimulation and finally, if the recipient is a rational entity that will seek to avoid the negative and embrace the positive stimuli.
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Ogus (1994) understands by reglamentation the regulation of a variety of industrial and nonindustrial activities that take a dual legal form: social regulation and economic regulation. Social regulation aims at making those market rectifications that are necessary to protect certain goods such as health, hygiene, safety and the environment. Its instruments include information, the establishment of standards, authorisations and licenses, economic instruments (canons and fees, subsidies, negotiable pollution rights) and private regulation (marketable rights, inalienable rights). The main purpose of economic regulation is to offer a substitute for competition in relation to natural monopolies and is expressed through three alternative formulas: public ownership, price and quality regulation, and administrative concessions.
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There are as many classifications of the tools available to public authorities as there are criteria to classify them; in turn, criteria and resulting classifications depend on the pursued objective. From what has been exposed so far, we see that, for some, the criterion is the type of instrument put into operation by the government (information, money, organisation or authority), whereas others classify the actions of public authorities according to the object of regulation (economic regulation or social regulation), and there are those who, like Summers, rearrange the instruments according to the legal techniques applied (reparation of damages, criminal, provider of benefits, regulator or facilitator of private agreements).
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Here I will not deal with nudging (see Thaler and Sunstein 2009).
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A first attempt to correlate the regulatory technique to be chosen with the regulatory problem at hand was offered by Summers (1971, p. 736), who discussed five major techniques, namely: damage reparation techniques, criminal law techniques; administrative-regulatory techniques; benefits-granting techniques; and private agreement techniques.
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For the sake of illustration, see e.g., in the UK, Thinking about Regulation. A Guide to Good Regulation; in the U.S, Alternative Regulatory Approach: an Overview; in Australia (Queensland), Business Regulation Review Unit. Training Module on Best Practice and Alternatives to Regulation (Department of Business, Industry and Regional Development 1994); or, in Canada, Evaluations des solutions de rechange à la reglementation. Guide des Affaires Reglementaires (1994).
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Zapatero Gómez, V. (2019). Legislative Policy. In: The Art of Legislating. Legisprudence Library, vol 6. Springer, Cham. https://doi.org/10.1007/978-3-030-23388-4_5
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