An Examination of the History of the Establishment of Regulatory Networks and Identification of the Necessities, Functions, and Tools of Regulatory Networks in the Country
Abstract
Regulatory agencies are nowadays considered an undeniable necessity for modern governance. Following the widespread adoption of the regulatory state concept, the number of such agencies has grown significantly across various countries over the past four decades.
Some view regulatory networks as a “second-best” policy option compared to establishing a formal coordination process with a single central authority. Others, however, emphasizing the advantages of networked governance and informal, non-hierarchical relationships, argue that these networks represent the “first-best” policy solution.
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The Necessities of Regulatory Networks
Regulatory networks have emerged as essential mechanisms in modern governance to address various systemic challenges:
- Harmful Regulatory Competition: Instead of promoting efficiency, uncoordinated competition among regulators often leads to a “race to the bottom,” undermining public interest.
- Regulatory Arbitrage: Firms exploit inconsistencies in regulatory systems to bypass strict rules, highlighting the need for coordinated oversight.
- Forum Shopping: Companies manipulate overlaps among regulators to choose the most favorable regulatory environment, weakening overall regulatory effectiveness.
- Resource and Expertise Gaps: Regulatory networks help agencies overcome shortages in resources and expertise by enabling collaboration and shared access to capabilities.
- Need for Coordination: Gaps between regulatory agencies necessitate consultation and coordination, which networks facilitate effectively.
- Shifting Policy Arenas: Regulators use informal networks to move discussions away from politically dominated formal settings to more flexible, peer-driven spaces.
Empowering Regulators
Networks help regulators become more independent, knowledgeable, well-resourced, and reputable by learning from peers and sharing expertise.
Setting, Promoting, and Monitoring Standards
They improve regulatory quality by spreading accepted best practices and professional norms across members.
Enhancing Reputational Incentives
Peer and public pressure within networks motivates regulators to align with high standards and protect their credibility.
Creating a Shared Professional Identity
Networks foster common values and identity among regulators, strengthening cohesion and resilience against external pressures.
Increasing Coordination, Convergence, and Consistency
They facilitate formal and informal collaboration, making regulations more aligned and coherent across agencies.
Improving Problem-Solving Capacity
By encouraging shared understanding, networks enhance collective problem-solving and cooperative behavior.
Increasing Regulatory Influence on Policy
Networks help regulators shape policy by uniting stakeholders and offering expert input to decision-makers.
Tools of Regulatory Networks
They use events, data sharing, training, reports, and agreements to carry out their roles effectively.
The Necessity of Regulatory Networks in Iran
Iran’s regulatory system is fragmented and politicized; a network could improve coordination, reduce conflict, and build a unified regulatory identity.
This study was conducted at Governance & Policy Think Tank in collaboration with Amirhossein Ghalandari, Mehdi Mirzaei, Mozhdeh Nateghi and Seyed Mohammadreza dadgostar in 2024.
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