Innovative Regulation through Competition: A Response to Rapidly Evolving Markets

Abstract

How can regulators keep up with sea changes in dynamic markets? This article proposes the use of competitive forces to generate innovative regulation. In markets where national, social, cultural, economic or other interests must be maintained in the face of evolving risks, heightened uncertainties and dynamic technological developments, regulators have to learn by doing.This article proposes the novel concept of intra-regulatory competition (IRC), a powerful method for developing innovative regulatory solutions by staging a contest between different regulatory regimes imposed simultaneously on market participants in a given jurisdiction. The article describes the principles of and justifications for IRC, conditions for its effective implementation, its potential benefits and drawbacks. IRC is analysed against the backdrop of similar concepts such as randomised law, experimental law and inter-jurisdictional competition. Finally, the article argues that the regulation of media content in order to promote cultural pluralism and the regulation of computerised trading in securities and futures markets are fields that are ripe for and compatible with the application of IRC.