Around the world, governments perform three main functions: they tax, they spend, and they regulate. And of those three functions, regulation is the least understood. The best way to avoid getting stuck with poorly performing regulatory systems is to subject them to ongoing and periodic reviews to make sure they are fully functional and reflective of social and economic realities, and help to achieve the government's objectives for the sector. This handbook provides a road map for evaluating the strengths and weaknesses of an existing system--a map that could lead to a shared understanding of existing problems and to realistic and effective recommendations for 'second-generation' regulatory reforms. It does this by providing detailed guidance on how to perform systematic, objective, and publicly available evaluations of existing regulatory systems. It also presents practical advice on how to develop recommendations for improving these systems. The handbook will be of considerable value to government officials, regulators, managers of regulated enterprises, and consumer representatives in many developing and developed countries.