write a short note on institutional design
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Institutional Design
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Proper institutional design1 is important for providing confidence to investors and customers that the regulatory process is credible, legitimate, and predictable. Regulation is credible if stakeholders can trust that commitments will be kept. Legitimacy means that the regulator is not captured by the operator or other special interests. Regulation is predictable if regulatory decisions are consistent over time so that stakeholders are able to anticipate how the regulator will resolve issues. Three main elements of institutional design are (1) the regulatory mechanism, (2) the existence of an independent, economically autonomous, well-funded and technically qualified regulatory agency, and (3) accountability mechanisms2 to prevent favoritisms.
You're in the section: Regulatory Process -> Institutional Design
Proper institutional design1 is important for providing confidence to investors and customers that the regulatory process is credible, legitimate, and predictable. Regulation is credible if stakeholders can trust that commitments will be kept. Legitimacy means that the regulator is not captured by the operator or other special interests. Regulation is predictable if regulatory decisions are consistent over time so that stakeholders are able to anticipate how the regulator will resolve issues. Three main elements of institutional design are (1) the regulatory mechanism, (2) the existence of an independent, economically autonomous, well-funded and technically qualified regulatory agency, and (3) accountability mechanisms2 to prevent favoritisms.
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Institutional design : (i) A constitution is mainly about embodying the values into institutional arrangements. (ii) It is a very long and detailed document. Therefore, it needs to be amended quite regularly to keep it updated.
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