Regulation can be considered as legal restrictions promulgated by government authority. One can consider regulation as actions of conduct imposing sanctions (such as a fine). This action of administrative law, or implementing regulatory law, may be contrasted with statutory or case law.

Regulation mandated by a state attempts to produce outcomes which might not otherwise occur, produce or prevent outcomes in different places to what might otherwise occur, or produce or prevent outcomes in different timescales than would otherwise occur. Common examples of regulation include attempts to control market entries, prices, wages, pollution effects, employment for certain people in certain industries, standards of production for certain goods, the military forces and services. The economics of imposing or removing regulations relating to markets is analysed in regulatory economics.

Regulation and Statute

A statute is passed by the legislature. A statute can have regulatory intent.

An implementing regulation (in democratic systems using laws as the basis for state action) is adopted by a public administration regulatory agency. In some national venues, there may be further review, as by an Office of Administrative Law (OAL). In countries with well established judicial systems, the regulation will be subject to judicial review, on challenge by a party having standing to bring an action ('standing' is usually interpreted to mean being adversely affected).

Regulation as a legal term

A regulation is a form of secondary legislation which is used to implement a primary piece of legislation appropriately, or to take account of particular circumstances or factors emerging during the gradual implementation of, or during the period of, a primary piece of legislation.

Other forms of secondary legislation are statutory instruments, statutory orders, by-laws and rules. Some of these (but not all of them) need to be referred back before being implemented, to the primary legislative process.

Types of regulation

Regulations, like any other form of coercive action, have costs for some and benefits for others. Efficient regulations may only be said to exist where the total benefits to some people exceed the total costs to others.

Regulations are justified using a variety of reasons and therefore can be classified in several broad categories:

• Market failures - regulation due to inefficiency. Intervention due to a classical economics argument to market failure.
• Risk of monopoly
• Collective action, or public good
• Inadequate information
• Unseen externalities
• Collective desires - regulation about collective desires or considered judgements on the part of a significant segments of society
• Diverse experiences - regulation with a view of eliminating or enhancing opportunities for the formation of diverse preferences and beliefs
• Social subordination - regulation aimed to increase or reduce social subordination of various social groups
• Endogenous preferences - regulation's purpose is to affect the development of certain preferences on an aggregate level
• Irreversibility - regulation that deals with the problem of irreversibility – the problem in which a certain type of conduct from current generations results in outcomes from which future generations may not recover from at all.
• Interest group transfers - regulation that results from efforts by self-interest groups to redistribute wealth in their favor, which may disguise itself as one or more of the justifications above.