Definition
- Regulatory capture
- Regulatory capture is when the industry being regulated comes to exercise influence over its regulators, so the rules serve the industry rather than the public.
Example
Can you think of an example of regulatory capture?
A rail regulator hires its senior staff from the train companies, and relies on those companies for its figures. Over time its rules protect the companies' profits rather than passengers, who get higher fares and late trains.
Test yourself
Can you name the four types of government failure the specifications list, and a fifth this page adds?