Regulatory capture

Regulatory capture is a situation in which an agency created to act in the public interest instead advances the interests of the companies or groups it regulates. It can occur gradually through lobbying, the movement of staff between industry and government, reliance on industry for information, or the fact that industry has more at stake in each decision than the diffuse public.

The economist George Stigler, in his 1971 essay "The Theory of Economic Regulation," argued that regulation is often acquired by industries and designed for their benefit, for example by limiting competition. The idea became a pillar of public choice theory. Examples cited include licensing boards controlled by incumbents, discussed under occupational licensing, and arguments over the early Interstate Commerce Commission and the airline regulation that preceded deregulation in 1978.

Conservatives and libertarians cite it to argue for deregulation and limits on the administrative state. Many progressives also accept the concern and use it to call for stronger ethics rules, transparency and independent funding. Critics of the concept say that it is overstated: agencies often act against industry, and the lack of regulation can lead to harm. It is related to crony-capitalism.