The capture theory of regulation indicates that a regulatory agency:
A) often serves the regulated firms rather than their customers.
B) encourages other regulatory agencies to deregulate their industries.
C) seeks to find market solutions that are economically efficient.
D) extends its regulatory powers over industries it was not intended to regulate.

Question

Quizplus · Accepted Answer

The capture theory of regulation suggests that regulatory agencies may become too close to the firms they are regulating, and end up serving their interests rather than the interests of consumers. This can ultimately result in a lack of effective regulation and a failure to protect the public interest.

The Capture Theory of Regulation Indicates That a Regulatory Agency