What is 'regulatory capture' in Economics

June 30, 2017 12:05 am | Updated 12:12 am IST

A phenomenon where government regulatory agencies are influenced more by the economic interests of special interest groups, rather than those of the general public. Regulatory capture is a form of government failure, where government agencies fail to perform their duties. Instead, they act against the very interests of the general public that they are mandated to protect. The idea is widely used in the study of the economics of regulation to explain the limits of government regulation as a solution to market failure. It was made popular by George Stigler, a member of the Chicago School of Economics.

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