The spectrum of regulatory models and its application to the digital economy

Policymakers regulating the digital economy face a difficult question: not only whether to intervene, but how to do so proportionately, balancing innovation against fast-evolving risks. This paper helps navigate that choice. It develops a methodology positioning regulatory models on a spectrum – from command-and-control, through performance-based regulation, market-based mechanisms and co-regulation, to different forms of self-regulation – categorised by their flexibility and the roles public and private actors play across the regulatory process. This enables structured comparison, clarifies trade-offs, and supports design of blended approaches combining different models. The paper offers criteria for model selection based on impact on innovation, market and private actor characteristics, and public institutional readiness. Applied to the digital economy, it finds that governments increasingly rely on blended models, with public actors retaining responsibility for setting regulatory objectives, while delegating the means of achieving them and regulatory delivery to private actors, under public oversight and accountability.