Regulation and small business

Justin Douglas and Amy Land Pejoska
Publication type


This article has three aims. First, it surveys the literature examining the claim that small businesses experience regulation more keenly than larger businesses. The survey indicates that, relative to their size, the burden of regulation is higher on smaller businesses where regulations impose the same requirements regardless of firm size. Second it demonstrates how a tiered regulatory approach can increase the net societal benefit of regulation. However, it also shows how tiering can have the unintended consequence of providing disincentives for small firms to grow due to more favourable treatment for remaining under tiering thresholds. The article concludes that reducing the burden of regulation and making compliance easier will typically increase the net benefits of small businesses regulation. This improvement results from increasing compliance rates and reduced compliance costs.