The public interest theory of regulation holds that a regulatory agency:
A) acts as the decision-making head of the industry it regulates.
B) encourages other regulatory agencies to deregulate their industries.
C) seeks to find market solutions that are economically efficient.
D) extends its regulatory powers over industries it was not intended to regulate.

Question

Quizplus · Accepted Answer

The public interest theory of regulation suggests that regulatory agencies seek to identify and implement market solutions that are efficient and maximize social welfare. This theory assumes that the agency acts in the public interest, rather than solely in the interest of the industry it regulates. Options A and D imply that the agency may overreach its intended scope, which contradicts the public interest theory. Option B suggests deregulation, which is not necessarily consistent with the theory of regulation.

The Public Interest Theory of Regulation Holds That a Regulatory