Trust in self-regulation: from a thin to an enhanced understanding of polycentric self-governance

Is the classic “thin” mode of self-regulation dead, and if so, why? The classic mode of self-regulation as a regulatory strategy carries many advantages. It is cheaper, more precise, and more flexible than direct modes of regulation. Self-regulation is also a very risky mode of regulation. Self-regulation transfers interpretation and compliance costs to the industry, consequently disadvantaging smaller organizations. It further relies on the existence of trust, which lack thereof must be replaced or enhanced by other regulatory instruments. Hence, this paper addresses the theoretical criticism of self-regulation and reviews how it transforms into polycentric self-governance. We ask three questions: first, how does the theoretical literature define self-regulation? Second, what are the strengths and weaknesses of self-regulation? Third, how do polycentric regulatory regimes establish and preserve self-regulation? We use our findings to draw lessons on the role of trust in enhanced and more credible modes of self-governance.