Regulators should tailor their tools to ensure a stable regulatory environment. The main regulatory tools and government interventions include:

Price Mechanisms. Price mechanisms such as taxes and subsidies can be used to further specify regulatory objectives e.g. sin taxes are often used to deter consumption of alcohol.

Restricting or Requiring Certain Activities. Regulators may ban certain activities (e.g. use of specific chemicals) or require that certain activities be performed (e.g. filing of 10K reports by publicly listed companies).

Provision of Public Goods or Financing of Private Projects. Regulators may provide public goods (e.g. national defence) or fund private projects (e.g. small business loans) depending on their political priorities and objectives.

The choice of regulatory tool should be consistent with maintaining a stable regulatory environment. "Stable" does not mean unchanging but, rather, refers to desirable attributes of regulation, including predictability, effectiveness in achieving objectives, time consistency, and enforceability.