Business Regulation: A Discussion on Whether it is More Effective to Punish or Persuade Businesses to Comply With Regulation.

“Astute enforcement can remedy design defects in regulatory mechanisms and ill-enforcement can undermine the most sophisticated designs of regulation.” (Baldwin & Cave, 1999) As this quote suggests, there is a balance to be achieved, rather than a hard-line approach one way or the other to regulatory enforcement. This paper will briefly outline the reasons why we regulate and the principle theories of regulation. It will then discuss punishment and persuasion in the context of the main methods of enforcement. It will then conclude by showing why an approach combining both punishment and persuasion is the most effective way to ensure business compliance with regulation.