Societies need regulation and businesses, as part of society, are no exception. Without the rules that underpin their establishment, operation and dissolution, modern businesses cannot exist. And where markets left to themselves would produce poor outcomes, well-designed regulation can ensure outcomes that are socially optimal and likely to leave everyone better off. Regulation can lead to fairer outcomes by correcting for imbalances in power between different players. For example, an unregulated labor market is unlikely to produce socially optimal outcomes for both employers and employees; balanced regulation can allow flexibility for employers while providing protections for workers. Regulation can also address asymmetries in information—such as those in the credit market, where borrowers are likely to have more information about their ability to repay a loan than lenders do.

In addition, regulation can enable the provision of public goods that markets cannot provide and without which markets cannot operate. For example, a well-designed land administration system, by providing reliable information on the ownership of property, makes it possible for the property market to exist and to operate. It is no surprise that land markets barely function in countries with no property registry, such as Libya and Timor-Leste. And regulation can induce market players to consider the impact of their actions on others. Take the example of a business that becomes insolvent. Without regulation, creditors each have an incentive to grab as much of the insolvent firm’s assets as they can, even if it is in their collective interest to see the firm restructured. Doing Business focuses on regulations and regulatory processes involved in setting up and operating a business. It analyzes those that address asymmetries in information (such as credit market regulations), those that balance asymmetries in bargaining power (such as labor market regulations) and those that enable the provision of public goods or services (such as business or property registration).