# kaal:claim:2740477-030

**Claim.** Regulation is mostly reactive and follows business cycles rather than preempting crises, because of the collective action problem of regulation, path dependencies, and political inertia, so rules arrive when governance improvements are least available.

**Type.** failure  **Support.** argued

**Source quote.**

> Because of the collective action problem of regulation, path dependencies, and political inertia, among many other reasons, regulation is mostly reactive, following business cycles and not preemptive, e.g. enacted before crises when governance improvements are most needed.

**From.** Wulf A. Kaal, Erik P.M. Vermeulen, *Venture Capital as Dynamic Regulation of Disruptive Innovation* (2016), V. Dynamic Regulation as a Regulatory Supplement, page 26

**Cite as.** Wulf A. Kaal, Erik P.M. Vermeulen, Venture Capital as Dynamic Regulation of Disruptive Innovation (2016). SSRN: https://ssrn.com/abstract=2740477

**Verify.** sha256 of source PDF `c72871b76fa2ad5a8a69ee8d3defc8f64e624be9052ce763e79cf6c58883f726` at https://raw.githubusercontent.com/wulfkaal/Academic-Papers/main/papers/pdf/Kaal%20and%20Vermeulen%20-%202016%20-%20Venture%20Capital%20as%20Dynamic%20Regulation%20of%20Disruptive%20Innovation.pdf

**Failure mode.** Reactive procyclical regulation  (family: regulatory-lag)

**Topics.** institutional-design

**Keywords.** regulatory-timing, collective-action, political-inertia, procyclical-regulation

**Related claims.**

- restated_by: https://wulfkaal.github.io/claims/2808132-034
- extends: https://wulfkaal.github.io/claims/2273857-053
- extends: https://wulfkaal.github.io/claims/kaal-2014-dynamicregulationviagove-008
- extends: https://wulfkaal.github.io/claims/2273857-020

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