Management-Based Regulation: Using Private Management to Achieve Public Goals

Abstract

We examine a rapidly emerging regulatory approach that we label management-based regulation. Management-based regulation shifts the locus of policy discretion from the government regulator to the regulated entity. Government directs private firms to incorporate public goals into their management practices, and provides general guidelines by which private management will be judged. We outline the conditions under which management-based regulation is likely to be an appropriate government strategy and discuss three applications of this approach.