Regulation_for_Innovativeness_or_Regulat

This article draws a broad picture of regulation of innovation. it describes “Law and Economics” and “Law and Technology” as two major approaches to determine the law’s importance for innovation.

Law and Economics often perceives innovation as an inherent aspect or result of functioning markets and, more importantly, as increasing social welfare. Therefore, this way of legal thinking identifies market failures (most of all market power that leads, for example, to monopolies and information asymmetry) as threats for innovation and, hence, as the main rational for regulation.

In contrast, law and technology sees the main rationales for regulation as ensuring compliance of innovation with fundamental rights, maximize its positive effects, and minimize negative effects.

The article also points out several difficulties when regulating innovation, such as the pacing problem, i.e. the problem that technology often develops faster than the corresponding regulation.