Regulation has its own Laffer Curve

That is, it’s possible to regulate something so much that the protections aimed at disappear. An obvious example is Prohibition in the US. Or perhaps we could look to our own tobacco markets where the level of taxation is leading to vaste swathes of the market being served by the illegal manufacturers - without, obviously, any of that regulation. We could go on to mutter about the foolishness in Australia, where strict regulation of vaping is leading to a rise in the teen tobacco smoking rate.

Or:

UK women driven to unregulated sperm donors by high treatment costs, experts say

The high costs of having a child using a sperm donor are driving poor and marginalised women in the UK to use unregulated online services rife with “weirdos” and misogynists in order to have a child, experts have said.

This does indeed lead to a reduction in the protections that regulation is supposed to provide.

It’s not just costs either. The regulation of the quality of the donors means that few UK based men do, certainly less than demand, the vital essence then being imported - often enough - from Denmark.

Our point here is not to argue over the optimal level of regulation in this specific market. It is, rather, to point to something we consider obvious. It’s entirely possible to so regulate as to be entirely counterproductive. A level of regulation that pushes ever more into that very chaos which the regulation is supposed to protect from.

As should be obvious, and as regulators near never do say, the correct meaning of optimal is not “more”.

Tim Worstall