Economies of Scale in Regulatory Compliance: Evidence of the Differential Impacts of Regulation by Firm Size

摘要

Uniform application of government regulations place a disproportionate burden on small firms if scale economies exist in regulatory compliance. The purpose of the study was to extract data from existing regulatory cost analyses in order to investigate the existence of scale economies in regulatory compliance for a sample of regulations. Fourteen regulations affecting large and small firms in approximately 150 three-digit industries were investigated. Regulations were selected to represent a range of federal regulatory functions and a diversity of industries, given an initial estimate of the distribution of the total costs of federal regulation by area and agency. The study shows that scale economies existed in regulatory compliance for each of the industry-regulation pairs. The analysis also shows that the scale economies observed indicate that the situation arose from multiple opportunities to reduce average total compliance cost as scale increased.