The problem of regulatory capture
Regulatory capture happens when a regulator starts protecting the industry it oversees instead of the public. The regulator loses its independence and serves the firms it was meant to control.
Real World
The US Federal Communications Commission has repeatedly been accused of regulatory capture — former industry lobbyists have moved into senior FCC roles and subsequently voted to reduce restrictions on telecoms giants like Comcast.
Exam Focus
Define regulatory capture precisely before evaluating it — state that the regulator acts in firms' interests rather than consumers' to secure the definition mark.
Price Elasticity of Demand
PED = % change in quantity demanded ÷ % change in price
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