New York University Public Law and Legal Theory Working Papers

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This paper presents a model of regulatory policymaking in which an interest group engages in costly regulatory quality improvements and rent-seeking to "capture" an agent by causing his preferences to shift toward the group's. The model serves two purposes. First, as a general framework, it accounts for various theories of capture from prior studies and organizes avenues for further research on specific mechanisms. Second, it analyzes institutional responses to capture, including limiting rent-seeking, making the agent more initially hostile to the group, and decreasing the strength of capture. A key implication is that aligning an agent's preferences with the public's and immunizing him from capture is not generally optimal; instead, it is typically better for him to be susceptible to capture associated with quality improvements but also initially more opposed to the group than the public. Examples from regulatory politics in the US are offered to support the model.

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regulatory capture, information, industry influence, lobbying, financial regulation