What does the term "regulatory capture" refer to in economics?

Multiple choice question for Applied Microeconomics. Select an option, then review the explanation below.

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When private companies influence the regulator to prioritize the industry's goals.When firms convince the regulator to serve their own specific interests.When regulators are bribed by private companies.When companies successfully lobby the government to alter regulations.

Explanation

Regulatory capture occurs when private firms manage to sway the regulator to act in favor of the industry's overall interests rather than the public's. This differs from bribery or direct lobbying for regulatory changes.

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What does the term "regulatory capture" refer to in economics?

Explanation

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