Legislation is the act of developing and making laws. The regulation refers to the rules and details of these laws. Economic legislation acts as the step between the formulation of an economic policy and implementation. Modern legislation uses the neoclassical approach to market analysis in order to assess the efficiency of new approaches¹.
Regulation can include the actions towards monitoring and enforcing economic policies and can exist in the form of self-regulation. Regulations can create unintended costs as well as benefits. A regulation is efficient with total benefits are greater than total costs. Regulations are implemented when, for example, there is a market failure and regulations are then used to restore the efficiency of a market.