The capture theory of regulation predicts that
A) regulation helps producers to maximize profits.
B) regulators capture the firm's economic profit and transfer it to consumers as consumer surplus.
C) regulators eliminate the deadweight loss a monopoly can create.
D) resources are used efficiently.
E) regulators capture the firm's economic profit and transfer it to themselves.

Question

Quizplus · Accepted Answer

The capture theory of regulation suggests that regulatory agencies may eventually come to be dominated by the very industries they are charged with regulating, leading to regulations that serve the interests of producers rather than the public interest. This can result in regulations that help producers maximize their profits.

The Capture Theory of Regulation Predicts That