Abstract: From the angle of Law and Economics, government regulation is a substitute or complement to law. Theories of substitute or complement of regulation to law consist of efficient theory of direct government versus law, theory of regulation and law to control social disorder and theory of incomplete law and government regulation. From the standpoint of restraining market failure and maintaining social order and justice, these theories indicate that government and law are all methods of social control. Once law can not cope with market failure and social disorder, regulation and regulatory body come into play. Evidently, this kind of theory of regulation gives a hint of wholly understanding regulation, which is an important revelation of effect of regulation. This can make us know limitation of legal system, rethink positive effect of regulation and consider direction and limit of reform of regulation.