Journal Article

Regulatory Capture: A Review

Ernesto Dal Bó

in Oxford Review of Economic Policy

Published on behalf of The Oxford Review of Economic Policy Ltd

Volume 22, issue 2, pages 203-225
Published in print January 2006 | ISSN: 0266-903X
Published online January 2006 | e-ISSN: 1460-2121 | DOI: http://dx.doi.org/10.1093/oxrep/grj013
Regulatory Capture: A Review

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This article reviews both the theoretical and empirical literatures on regulatory capture. The scope is broad, but utility regulation is emphasized. I begin by describing the Stigler–Peltzman approach to the economics of regulation. I then open the black box of influence and regulatory discretion using a three-tier hierarchical agency model under asymmetric information (in the spirit of Laffont and Tirole, 1993). I discuss alternative modelling approaches with a view to a richer set of positive predictions, including models of common agency, revolving doors, informational lobbying, coercive pressure, and influence over committees. I discuss empirical work involving capture and regulatory outcomes. I also review evidence on the revolving-door phenomenon and on the impact that different methods for selecting regulators appear to have on regulatory outcomes. The last section contains open questions for future research.

Journal Article.  0 words. 

Subjects: Economic Development and Growth ; Public Economics ; Political Economy ; Public Policy

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