Suppose that a regulatory agency helps producers maximise economic profit. This type of regulation coincides with

Question

Quizplus · Accepted Answer

The fact that the regulatory agency is helping producers maximise economic profit suggests that the producers have captured the regulator and are using their regulatory influence to ensure that prices are aligned with their own profit-maximising goals, rather than the social interest theory of regulation (B) which aims to maximise social welfare. This points towards the capture theory of regulation (E) whereby the regulatory agency is captured by the industry it is supposed to regulate. Therefore, the answer is E.

Suppose That a Regulatory Agency Helps Producers Maximise Economic Profit