Regulatory Capture

Extracted Attributes

• Related Concept

  Rent-seeking and political failure

• Alternative Name

  Agency capture

• Primary Mechanisms

  Revolving door, lobbying, campaign contributions, client politics

• Key Economic Theorist

  George Stigler

• Negative Consequences

  Stifled innovation, barriers to entry, net loss for society, subversion of democratic process

Timeline

• George Stigler introduces the economic theory of regulatory capture, suggesting industries have a stronger interest in influencing regulators than the general public. (Source: Investopedia)

  1971-01-01

• The Boeing 737 Max scandal highlights alleged regulatory capture of the FAA by the aviation industry following safety failures. (Source: GoodParty.org)

  2019-03-10

• The US Congress passes a bill to force ByteDance to divest TikTok, sparking debate on whether the move constitutes regulatory capture for the benefit of Meta. (Source: Document bca48762-c3af-4cc6-bc53-1d20027b0626)

  2024-03-13

• Florida moves to ban lab-grown meat, a move critiqued as regulatory capture by the ranching industry to stifle technological innovation. (Source: Document bca48762-c3af-4cc6-bc53-1d20027b0626)

  2024-03-15

Regulatory capture

In politics, regulatory capture (also called agency capture) is a form of corruption of authority that occurs when a political entity, policymaker, or regulator is co-opted to serve the commercial, ideological, or political interests of a minor constituency, such as a particular geographic area, industry, profession, or ideological group. When regulatory capture occurs, a special interest is prioritized over the general interests of the public, leading to a net loss for society. The theory of client politics is related to that of rent-seeking and political failure; client politics "occurs when most or all of the benefits of a program go to some single, reasonably small interest (e.g., industry, profession, or locality) but most or all of the costs will be borne by a large number of people (for example, all taxpayers)".

Web Search Results

• Regulatory capture

  In politics, regulatory capture (also called agency capture) is a form of corruption of authority that occurs when a political entity, policymaker, or regulator is co-opted to serve the commercial, ideological, or political interests of a minor constituency, such as a particular geographic area, industry, profession, or ideological group. [...] For public choice theorists, regulatory capture occurs because groups or individuals with high-stakes interests in the outcome of policy or regulatory decisions can be expected to focus their resources and energies to gain the policy outcomes they prefer, while members of the public, each with only a tiny individual stake in the outcome, will ignore it altogether. Regulatory capture refers to the actions of interest groups when this is successful at influencing the staff or commission members [...] The likelihood of regulatory capture is a risk to which an agency is exposed by its very nature. This suggests that a regulator should be protected from outside influence as much as possible. Alternatively, it may be better to not create a given agency at all. A captured regulator is often worse than no regulation, because it wields the authority of government. However, increased transparency of the agency may mitigate the effects of capture. Recent evidence suggests that, even in mature

• Understanding Regulatory Capture: Definition, Impact, and ...

  Regulatory capture is a process by which regulatory agencies become dominated by the interests of those they were originally charged to regulate. In this state, the regulatory agency may directly or indirectly work to serve the interests of private firms rather than the general public. The economic theory behind regulatory capture was introduced by Nobel laureate George Stigler. [...] Regulatory capture is a process by which regulatory agencies may come to be dominated by the industries or interests they are charged with regulating. As a result, the agency acts to benefit established firms in the industry instead of serving the public interest. Industries have an influence on regulation and pose challenges by lobbying. ### Key Takeaways [...] Regulatory capture occurs when agencies prioritize the interests of industries they regulate over the public interest. The revolving door between industry and regulatory bodies can lead to biased agency actions. Capture theory suggests that industries have a stronger interest in influencing regulators than the general public does. Regulatory capture can create barriers to entry for new firms, benefiting established businesses.

• Political Corruption 101: Examples of Regulatory Capture

  Regulatory capture is a form of government failure that occurs when a regulatory agency, which was established to act in the public interest, instead advances the commercial or political concerns of the industry it is supposed to be regulating. This can happen through a variety of mechanisms, including the revolving door (where individuals move between roles as industry advocates and regulators), lobbying, campaign contributions, and other forms of influence. [...] Regulatory capture is a cancer on the American political system that undermines public trust and subverts the democratic process. Because it allows private interests to hijack public policy, we experience outcomes that are often detrimental to the public good. The examples of the FAA, SEC, and FDA are just the tip of the iceberg, as regulatory capture is pervasive across many sectors of government. [...] It also stifles competition and innovation, as established players use their regulatory clout to stymie newcomers and maintain their market dominance. In short, regulatory capture is a betrayal of the democratic principle of government of and for the people. Here are just a few examples of regulatory capture in action and the devastating consequences. #### Example #1: The Federal Aviation Administration and the Boeing 737 Max Scandal

• [PDF] Preventing Regulatory Capture: Special Interest Influence and How ...

  effort at definition by offering one that is both broad and flexible. As with any definition or model, numerous amendments must be (and will be) made in order to apply the term as we understand it. With that said, our definition is as follows: Regulatory capture is the result or process by which regulation, in law or application, is consistently or repeatedly directed away from the public interest and toward the interests of the regulated industry, by the intent and action of the industry itself. [...] Introduction Daniel Carpenter and David A. Moss When markets or regulations fall short of our expectations, observers often point to regulatory capture as a culprit. Critics maintain that regulatory capture stunts competition and innovation, as firms able to capture their regulators effectively wield the regulatory power of the state and can use it as aweapontoblocktheentryorsuccessofotherfirms.Somecriticsevenblame regulatory capture for the outbreak of financial crises and other manmade [...] THE PROMISE OF A NEW APPROACH It is said that a little knowledge is a dangerous thing. With respect to regula-tory capture, as we have seen, policy analysts are often quick to see capture whenever an interest group appears to benefit from regulation, or even when there is merely motive for capture. Many observers also – almost instinc-tively – conceive of capture in black-and-white terms when considering potential policy responses. Both steps are fraught with risk, and yet both are often seen as

• Regulatory Capture Explained: 3 Regulatory Capture Examples - 2025

  Regulatory capture refers to the process by which regulatory industries end up doing the bidding of the very industries they have an intrinsic