regulatory capture

Meaning

Regulatory capture is a form of government failure that occurs when a regulatory agency, created to act in the public interest, instead advances the commercial or political concerns of special interest groups that dominate the industry it is charged with regulating. The tone is critical, academic, and highly professional, used in discussions of public policy, economics, and business ethics.

Examples

• The agency's failure to enforce safety standards was widely blamed on regulatory capture by the aviation industry.

  The agency's failure to enforce safety standards was widely blamed on regulatory capture by the aviation industry.

• Critics argue that the close relationship between Wall Street and its regulators is a clear case of regulatory capture.

  Critics argue that the close relationship between Wall Street and its regulators is a clear case of regulatory capture.

• To prevent regulatory capture, the government should rotate inspectors frequently and limit industry lobbying.

  To prevent regulatory capture, the government should rotate inspectors frequently and limit industry lobbying.

• Regulatory capture undermines public trust and creates unfair advantages for established market leaders.

  Regulatory capture undermines public trust and creates unfair advantages for established market leaders.

• The new environmental policy was watered down due to regulatory capture by fossil fuel conglomerates.

  The new environmental policy was watered down due to regulatory capture by fossil fuel conglomerates.

Common Mistakes

• ✗ The company did regulatory capture on the government agency.

  ✓ The government agency suffered from regulatory capture by the company.

  Regulatory capture is a state or phenomenon that an agency experiences or suffers from, not an action a company 'does'. Use phrases like 'suffer from regulatory capture' or 'lead to regulatory capture'.

• ✗ We need to capture the regulations to help our business grow.

  ✓ We need to lobby the regulators to help our business grow.

  Regulatory capture is a systemic, often corrupt phenomenon described by economists. It is not a legitimate business strategy that a company openly plans to execute as an action verb.

Related Expressions

Practice

• When a watchdog agency begins protecting the very industry it is supposed to police, it is called ___.

  💡 A form of government failure where special interests dominate a regulator.

  Show answer

  regulatory capture

• The investigative report warned of ___ within the pharmaceutical licensing board.

  💡 When regulators favor the commercial interests of the industry they oversee.

  Show answer

  regulatory capture