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Regulatory Capture

Regulatory capture is a form of government failure in which a regulatory agency meant to advance the public interest by regulating certain segments of human activity instead advances the interests of the industries it is meant to regulate at the expense of the public.

 

In such a situation, we say that the regulatory agency has been “captured” by the industry it regulates. 

 

For example, a former executive of an oil company becoming the head of the Environmental Protection Agency and rolling back environmental protections on his former employer at the expense of public health would constitute regulatory capture. In this scenario, the EPA has been co-opted to advance the interests of the industry it is meant to regulate rather than the public interest and we would say that the EPA is a "captured agency."

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