ECONOMICS
FINANCIAL MARKETS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Yes, I understand this from the notes
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No, I don’t understand this from the notes
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No, I don’t understand this, as I have not read the notes
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None of the above
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Detailed explanation-1: -Regulatory capture can, in some cases, even result in deregulation of the behavior of the supposed subjects of the regulation themselves, while maintaining regulations that benefit them, such as barriers to entry, subsidies, and taxpayer bailout guarantees.
Detailed explanation-2: -Regulatory capture arises when regulatory decisions advance private interests over the interests of the public. How do we prevent capture? The best way is often not to regulate at all. But when regulation is truly needed, it should be established through transparent procedures that involve checks and balances.
Detailed explanation-3: -Regulatory capture is a form of government failure. It happens when a government agency operates in favour of producers rather than consumers. This often happens when suppliers have significant lobbying power e.g. with government agencies.
Detailed explanation-4: -It creates a huge government bureaucracy that stifles growth. It can create huge monopolies that cause consumers to pay more. It squashes innovation by over-regulating. Is extremely costly to the tax payers.