Therefore, responsive regulation prescribes how best regulatory enforcement can promote compliance.
Responsive regulation provides a chance for the regulator to understand the intricacies between state regulation and private regulations. This is because the regulator steps aside only to become involved if need be. Good regulation however has to realize the important role played by both self regulation and state regulation and offer room for both2 . Hence formal law ought to incorporate the best commercial practices and serve to entrench those practices. This is what responsive regulation seeks to achieve. Formal law should serve as a basis for the industry to self regulate. Business communities ought to formulate law for themselves with the courts checking how businesses use those laws.
A good policy needs not force the businesses choose between self regulation and government regulation. This is because it is possible to have the best of both3. Good policy has to do with understanding self regulation and how it relates to government regulation. Hence laws that regulate businesses have to be developed and implemented with the involvement of the affected businesses. Other than the government designing policies for the businesses it has been found out that, better policies are arrived at when both the government and the private sector participate.
Responsive regulation advocates that the regulator responds to the structure of the industry being regulated. This means that different structures in the industry will be subjected to different degrees of regulation4. This is because different levels of the industry have different motivations hence deserve slightly different degrees of regulation. Regulation from the government should take into account the diverse objectives of the businesses under regulation.