Definition
Regulatory Capture
When a regulatory agency serves the interests of the industry it regulates rather than the public.
Definition
When a regulatory agency serves the interests of the industry it regulates rather than the public.
Why It Matters
Regulatory capture explains why rules designed to protect consumers often end up protecting incumbents. The regulated industry has concentrated incentives to influence regulators; the public has diffuse, harder-to-organize interests.
Policy Example
The "revolving door" between tech companies and their regulators is a regulatory capture concern in digital markets. If officials who set data privacy policy previously worked for — or expect to work for — the platforms they regulate, their decisions may systematically favor industry over public interest.
In Context