Policymakers are engaged in a continuing, thorough reexamination of how national and state governments regulate areas ranging from telecommunications to the environment. So extensive is the questioning of the familiar, and so daring some of the proposed and actual changes, that the movement deserves the term revolution.

In this volume Robert W. Hahn shows how a deeper understanding of the economic and social impacts of regulation is fueling the regulatory revolution. People are becoming more aware that regulations impose costs on individuals, even if those costs are hidden from view, as is the case with most regulation. Changes in the economic benefits and costs of regulation that technology has induced are also driving the revolution. Those technological innovations increase the cost of maintaining the existing regulatory structure and thus create pressure for change. Hahn demonstrates how improvements in monitoring outputs and behavior are propelling the revolution.

We need, Hahn asserts, to examine the revolution in regulation not only in terms of its impact on national economies, but also in terms of its potential international effects. For example, stringent regulation of the environment in one country may induce firms to relocate to other countries. In addition, product specifications introduced under the guise of protecting consumers may give domestic producers a competitive advantage. Thus, regulation can dramatically influence the pattern of international trade and investment.

The international ramifications of domestic regulation are likely to increase in importance as markets become more global. Hahn points out that just as nations have attempted to coordinate their activities to reduce direct trade barriers such as tariffs, they may also need to coordinate some regulatory activities that distort patterns of trade and investment.

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