Regulatory capture poses a challenge to effective regulation from "summary" of The Economics of Regulation: Principles and Institutions: Economic principles by Alfred Edward Kahn
Regulatory capture, a phenomenon where regulatory agencies become excessively influenced by the industries they are meant to oversee, presents a significant obstacle to achieving effective regulation. As regulatory agencies are tasked with creating and enforcing rules to protect the public interest, it is crucial that they maintain independence and act in the best interest of society as a whole. However, when these agencies become captured by the industries they regulate, their ability to fulfill this mandate is compromised. When regulatory capture occurs, industry insiders may use their knowledge, relationships, and resources to shape regulations in a way that benefits their own interests rather than those of the public. This can lead to regulations that are overly lenient, favoring industry profits over consumer welfare or environmental protection. Additionally, regulatory capture can result in agencies turning a blind eye to violations or failing to enforce regulations effectively, further undermining the regulatory process. The consequences of regulatory ...
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