Regulatory capture is said to have occurred when which of the following is true?
A) Rules and enforcement in an industry are heavily inﬂuenced by the industry being regulated.
B) One ﬁrm controls an entire market, having captured customers away from other ﬁrms.
C) Government imposes excessive regulations in an industry, resulting in ineﬃciencies.
D) Consumers make all the rules for an industry, forcing ﬁrms into ineﬃcient production methods.

Question

Quizplus · Accepted Answer

Regulatory capture occurs when the industry being regulated heavily influences the rules and enforcement put in place by the government. This can lead to a situation where the regulator is more interested in protecting the interests of the industry than ensuring that consumers are protected. Options B, C, and D are incorrect as they do not accurately describe the concept of regulatory capture.

Regulatory Capture Is Said to Have Occurred When Which of the Following