Regulation by Reward: On the Use of Incentives as Regulatory Instruments*

This essay explores the use of positive reinforcement as a regulatory strategy. It discusses both financial and symbolic incentives and their application in furtherance of regulatory compliance, and presents various illustrative examples of the use of positive incentives by regulatory authorities. It then reviews the advantages and potential shortcomings of regulatory incentives, and suggests principles by which incentive instruments can be used as part of an overall regulatory regime.