Regulation is not a panacea. While it may address market power concerns regulation comes with costs. Where it is possible, effective competition will generally deliver better outcomes than regulation.
Where regulation is necessary, regulatory forbearance is the key to good outcomes. Regulatory forbearance is about focusing regulation to where it is needed, and withdrawing regulation in those parts of the market where it is no longer necessary. In other words, the concept of regulatory forbearance rests on the goal of a gradual removal of ex ante regulation and an accompanying increase in the use of general ex post competition regulation.
The concept of regulatory forbearance has two elements:
- A regulator may refrain from applying certain regulatory conditions, or from intervening in certain markets. For example, the Canadian Radio-television and Telecommunications Commission has explicitly stated that it will forbear from regulating certain services
- A regulator may reduce the scope of regulation, or withdraw entirely from regulating specified markets.
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