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REMEDIES AND REGULATORY STRATEGIESREMEDIES AND REGULATORY STRATEGIES

THE LEVESON INQUIRYTHE LEVESON INQUIRY12 OCTOBER 201112 OCTOBER 2011

Professor Robert Baldwin The London School of Economics and Political Science

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STRATEGIES AND SMART REGULATION

STATE INDUSTRY SELF-REGULATION

CORPORATION

ADVICE ADVICE ADVICE

EDUCATION EDUCATION TRAINING SUPERVISION

PERSUASION GUIDANCE INCENTIVES

WARNINGS/NOTICES WARNINGS REVIEWS

CIVIL LAW REMEDIES SANCTIONS PROMOTIONS

CRIMINAL LAWS AND SANCTIONS

DISQUALIFICATION DISCIPLINE

DISQUALIFICATIONS DISMISSAL

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THE DREAM FRAMEWORK

1. DETECTION GAINING INFORMATION ON UNDESIRABLE BEHAVIOUR

2. RESPONSE DEVELOPING TOOLS TO DEAL WITH THE PROBLEMS

3. ENFORCEMENT APPLYING TOOLS ON THE GROUND

4. ASSESSMENT MEASURING SUCCESS OR FAILURE

5. MODIFICATION ADJUSTING TOOLS AND STATEGIES

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1. DETECTION CLANDESTINE OPERATIONS

REACTIVE

RESOURCES

2. RESPONSE CONSISTENCY

A RULE - BOUND WORLD

3. ENFORCEMENT MEDIA FREEDOM

A POLITICAL ISSUE?

DETERRENCE ASSUMPTIONS

4. ASSESSMENT OFF THE SCREEN ISSUES

5. MODIFICATION THE CHALLENGE OF LEGISLATIVE CHANGE

CRIMINAL LAW APPROACHES

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1. DETECTION RESOURCES

POWERS TO INVESTIGATE

2. RESPONSE EXPERTISE

3. ENFORCEMENT EVIDENCE

COMMITMENT

DAMAGES

UNDER-DETERRENCE

4. ASSESSMENT WHO ASSESSES?

5. MODIFICATION WHO INSTIGATES LEGAL CHANGE?

CIVIL LAW APPROACHES

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1. DETECTION PUBLIC FAITH

POWERS TO DETECT?

2. RESPONSE SELF-SERVING?

3. ENFORCEMENT RECORDS OF SELF-REGULATORS?

WHAT DOES COMPLIANCE MEAN?

4. ASSESSMENT INCENTIVE TO GLOSS

5. MODIFICATION WHY CHANGE?

INDUSTRY SELF-REGULATION

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1. DETECTION - HIGH POTENTIAL

- HOW TO INCENTIVISE FIRMS

(ADJUST SANCTIONS?)

2. RESPONSE - DIFFERENT WORLD VIEWS

- TRUST IN GOODWILL / SKILL

- COUNTER INCENTIVES AND THE REWARDS OF SIN

3. ENFORCEMENT - WILL SANCTIONS BE MATCHED BY REWARDS?

- CREATIVE COMPLIANCE

- SCAPEGOATING / TOP-DOWNISM

4. ASSESSMENT DEFINING / MEASURING SUCCESS

5. MODIFICATION INCENTIVISING IMPROVEMENTS IN BEHAVIOUR

REGULATION WITHIN THE COMPANY

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WHAT ARE THE REGULATEES LIKE?

WELL-INTENTIONED LOW CAPACITY

WELL-INTENTIONED HIGH CAPACITY

ILL-INTENTIONED LOW CAPACITY

ILL-INTENTIONED HIGH CAPACITY

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SPECIAL CHALLENGES

• VERY HIGH INCENTIVES TO ILL-INTENTION• STRONG CULTURE AND RESISTANCE TO

‘ILLIBERAL’ REGULATION• VERY HIGH CAPACITY• VERY HIGH POWER TO CAPTURE AT THE

HIGHEST LEVELS• DETECTION AND ENFORCEMENT

• OWNERSHIP AND POWER ARE THE PRIMARY ISSUES

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DESIGNING GOOD REGULATION

AIMING FOR THE PERFECT DESIGN

- BEST GUESSING

- HOPING IT WORKS

MODIFICATION

- SENSIBLE ADJUSTMENTS OR - MOVING THE GOALPOSTS?