Regulatory Capture

52 shades of greed

In economics, regulatory capture occurs when a state regulatory agency created to act in the public interest instead advances the commercial or special interests that dominate the industry or sector it is charged with regulating. Regulatory capture is a form of government failure, as it can act as an encouragement for large firms to produce negative externalities (a cost or benefit incurred by a party who did not agree to the action causing the cost or benefit). The agencies are called ‘captured agencies.’

In the aftermath of the 2010 Deepwater Horizon oil spill, the Minerals Management Service (MMS), which had had regulatory responsibility for offshore oil drilling, was widely cited as an example of regulatory capture. The MMS is now known as the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE).

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