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Regulatory capture

Regulatory capture is a form of government failure. It happens when a government agency operates in favour of producers rather than consumers. Regulatory capture is also known as a form of political capture or "cronyism."

Regulatory capture refers to the phenomenon in which a regulatory agency, created to act in the public interest, becomes controlled by the industries it is meant to regulate. This can occur when industry representatives have significant influence over the agency's decision-making process, either through the appointment of sympathetic individuals to leadership positions or through direct lobbying efforts. As a result, the regulatory agency may prioritize the interests of the industry over the broader public interest, and may adopt policies that are favourable to the regulated industry rather than protecting the public. Regulatory capture can have serious consequences, including undermining the effectiveness of regulation and leading to negative impacts on consumers, the environment, and the economy.

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