regulatory capture Flashcards
1
Q
definition
A
an economic theory that says regulatory agencies may come to be dominated by the industries or interests they are charged with regulating
2
Q
causes
A
- bribery: motivated by financial reward - Adam smith rational pursuit of self interest. Robert Jenrick MP was accused of this
- familiarity: can become friendly over time and therefore biased, leading to increased willingness to go easy on those they are regulating
- revolving door: regulators often go to work for companies they were previously responsible for regulating.
3
Q
impacts
A
- fall in quality
- rise in price
- rise in externailities
- asymmetric information
