Self-regulation as a remedy for market turmoil: An over-the-counter or a prescription drug?

The paper tackles the problem of the overwhelming regulatory burden that marks its presence in a post-crisis environment. With evidence of regulatory overload in some cases, paths for more effective design of regulatory frameworks should be sought. Although self-regulation does not enjoy favorable publicity and happens to fail to prove its value in times of distress, it still may serve as a remedy. A number of studies shows that, under specific circumstances, the self-regulatory framework may operate seamlessly for the benefit of all stakeholders. The goal of this paper is to identify these circumstances and validate them on the basis of three concise case studies from the health care, advertising and financial services industry. It is instructive for policy makers in deciding on whether to abandon or reduce public oversight in certain areas, by allowing businesses more freedom in terms of setting and enforcing the rules.