What Is Regulatory Capture?
In industries that serve critical needs, it is tempting to turn to regulation as a method of promoting competition. But one trade-off to be aware of is a phenomenon called “regulatory capture.” Regulatory capture is the tendency for firms and their government regulators to develop mutually beneficial relationships at the expense of the broader public or their future competitors.
Incentives For Lobbying
In industries that serve critical needs, it is tempting to turn to regulation as a method of protecting consumers and promoting competition. But companies that are regulated have strong financial reasons for lobbying and working closely with their regulators and consulting on the very rules they'll be governed by.