Regulatory capture often occurs because of which of the following?
A) Government oﬃcials want stronger control over industry regulation.
B) Nearly everyone with expertise works in the regulated industry.
C) Patent law allows ﬁrms to gain monopoly power easily and therefore control a market.
D) Consumer groups are effective at lobbying the government for industry regulation.

Question

Quizplus · Accepted Answer

Regulatory capture occurs when regulatory agencies become too closely aligned with the industries they are supposed to oversee. This can happen when there is a "revolving door" between the industry and the agency, or when regulators become too sympathetic to industry concerns. One reason this happens is because the people with the most expertise in the industry are often the ones who end up working for the regulatory agency, leading to a situation where the regulators are more interested in protecting the industry than protecting consumers or other stakeholders. Choices A, C, and D are not directly related to the phenomenon of regulatory capture.

Regulatory Capture Often Occurs Because of Which of the Following