The public choice theory of regulation:
A) holds that firms may have to be regulated in order to guarantee that certain goods and services are available to consumers.
B) is often justified by pointing to such things as pollution that are not considered by firms on their own.
C) is used to counter market failure.
D) holds that a regulatory agency often serves the interests of government bureaucrats over those of the public.

Question

Quizplus · Accepted Answer

The public choice theory of regulation holds that a regulatory agency often serves the interests of government bureaucrats over those of the public. This theory argues that regulators may become captured by the industries they are supposed to be regulating, leading to a lack of effective regulation and increased industry influence on policy.

The Public Choice Theory of Regulation