According to economist George Stigler,the process of regulating firms with market power becomes suspect over time because
A)regulators impose additional costs on regulated firms because they are expected to accomplish other social goals.
B)regulators shift from protecting the consumer to protecting the regulated firm from competition.
C)regulated firms are allowed to expand into other markets and drive out competing firms.
D)regulated firms devise methods to circumvent the regulations.
E)regulation leads to corruption of political parties.

Question

Quizplus · Accepted Answer

According to George Stigler, regulators may shift from protecting consumers to protecting the regulated firm from competition over time. This happens because the regulator may become dominated by the interests of the regulated firms or the regulator is subjected to regulatory capture. In regulatory capture, a regulator comes to act in the interests of the regulated industry rather than in the public interest. This may lead to a situation where the regulator protects the market power of the regulated firm rather than promoting competition, which in turn hurts consumers.

According to Economist George Stigler,the Process of Regulating Firms with Market