Regulatory Capture

Questions

What is Regulatory Capture?

Regulatory capture happens when an agency created to protect the public gradually starts serving the industry it regulates. The watchdog begins working for the people it is supposed to watch, often through close ties, shared expertise, and information the industry controls.

How do you use Regulatory Capture?

When reading about regulatory decisions, ask who benefits and look for independent sources. Support transparency and independent data that reduce information gaps. In your own organization, keep oversight separate from the people being overseen, for example with rotating audits or independent reviews.

When does Regulatory Capture matter?

Regulatory Capture is one of the 40 mental models for fixing problems, the situations where you ask: Why does this keep going wrong, and how do I fix it for good? Within that, it belongs to “Rewards and rules”, alongside Cap and Trade, Coase Theorem and Goodhart’s Law.

What is an example of Regulatory Capture?

Two stories show it at work: Railways and the ICC (1887–1892) and Minerals Management Service (2008–2010). Both are told in full in The Mental Models Daily Almanac, which has two stories for each of its 365 models.

Which mental models are related to Regulatory Capture?

Bias from Incentives, Moral Hazard and Government Failure. Regulatory Capture itself comes from economics.