Regulatory Capture

AAA

DEFINITION of 'Regulatory Capture '

Regulatory capture is a theory associated with George Stigler, a Nobel laureate economist. It is the process by which regulatory agencies eventually come to be dominated by the very industries they were charged with regulating. Regulatory capture happens when a regulatory agency, formed to act in the public's interest, eventually acts in ways that benefit the industry it is supposed to be regulating, rather than the public.

INVESTOPEDIA EXPLAINS 'Regulatory Capture '

Public interest agencies that come to be controlled by the industry they were charged with regulating are known as captured agencies. Regulatory capture is an example of gamekeeper turns poacher; in other words, the interests the agency set out to protect are ignored in favor of the regulated industry's interests.

RELATED TERMS
  1. Socionomics

    The study of the relationship between social mood and social ...
  2. Too Big To Fail

    The idea that a business has become so large and ingrained in ...
  3. Microeconomics

    The branch of economics that analyzes the market behavior of ...
  4. Moral Hazard

    The risk that a party to a transaction has not entered into the ...
  5. Behavioral Economics

    The study of psychology as it relates to the economic decision ...
  6. Economics

    A social science that studies how individuals, governments, firms ...
Related Articles
  1. How Influential Economists Changed Our ...
    Fundamental Analysis

    How Influential Economists Changed Our ...

  2. Nobel Winners Are Economic Prizes
    Options & Futures

    Nobel Winners Are Economic Prizes

  3. The History Of Economic Thought
    Economics

    The History Of Economic Thought

  4. The History Of Capitalism: From Feudalism ...
    Personal Finance

    The History Of Capitalism: From Feudalism ...

comments powered by Disqus
Hot Definitions
  1. Correlation

    In the world of finance, a statistical measure of how two securities move in relation to each other. Correlations are used ...
  2. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  3. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  4. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  5. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  6. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
Trading Center