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

Authors

  • Cary Coglianese,

  • David Lazer


  • The authors gratefully acknowledge support from the Ash Fund for Research on Democratic Governance at the Kennedy School, as well as helpful comments received on earlier versions of this article from participants in meetings of the Law and Society Association, the Association of Public Policy and Management, the Visions of Governance in the Twenty-First Century Project, and the Kennedy School's faculty research seminar. We would especially like to thank Jack Donahue, Neil Gunningham, Robert Hahn, Jay Hamilton, Bridget Hutter, Paul Kleindorfer, Howard Kunreuther, Ted Marmor, Jennifer Nash, Todd Olmstead, Eric Orts, Peter Schmeidler, Jeff Smoller, Peter Strauss, Ulku Oktem, David Weil, and the anonymous reviewers from this journal for their thoughtful and constructive feedback on earlier versions of this article.

Address correspondence to the authors at Harvard University, John F. Kennedy School of Government, 79 John F. Kennedy Street, Cambridge, MA 02138, or by e-mail to cary_coglianese@harvard.edu or david_lazer@harvard.edu

Abstract

We analyze a little-studied regulatory approach that we call management-based regulation. Management-based regulation directs regulated organizations to engage in a planning process that aims toward the achievement of public goals, offering firms flexibility in how they achieve public goals. In this article, we develop a framework for assessing conditions for using management-based regulation as opposed to the more traditional technology-based or performance-based regulation. Drawing on case studies of management-based regulation in the areas of food safety, industrial safety, and environmental protection, we show how management-based regulation can be an effective strategy when regulated entities are heterogeneous and regulatory outputs are relatively difficult to monitor. In addition to analyzing conditions for the use of management-based regulation, we assess the range of choices regulators confront in designing management-based regulations. We conclude that management-based regulation requires a far more complex intertwining of the public and private sectors than is typical of other forms of regulation, owing to regulators’ need to intervene at multiple stages of the production process as well as to the degree of ambiguity over what constitutes “good management.”

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