Regulatory agencies are governmental commissions that devise and enforce standards in the market economy. The self-reinforcing relationship between corporate reputation and regulatory agencies is an essential element of the success of each. Most economists and politicians agree that competition in the marketplace, governed by corporate reputation, is the most efficient regulator of economic activity, and so regulation serves simultaneously as an enhancement and as a surrogate for corporate reputation. As Supreme Court justice Stephen Breyer has argued, regulation either serves to correct a market distortion that the industry itself can’t resolve or meets a social goal that the industry doesn’t value. Thus, regulatory agencies have always been, from their initial creation, a consequence of market failure in situations where monopoly power, economic externalities, or ...

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