Regulatory Capture

When regulation protects narrow interests – usually the interests of the incumbent industry – at the expense of the public interest. Capture occurs in various ways: from straightforward bribes and threats, to more implicit quid pro quos such as the lucrative future employment (revolving door), to softer forms of cognitive/cultural capture.
“… as a rule, regulation is acquired by the industry and is designed and operated primarily for its benefit.” George Stigler – The Theory of Economic Regulation (1971)

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The Mechanisms of Regulatory Capture

Filippo Lancieri

To mark the 50-year anniversary of George Stigler’s seminal piece, “The Theory of Economic Regulation” we are publishing a new eBook examining his theory’s...

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Fear of Punishment Distorts Bank Financial Reporting

Hamid Mehran

When bank employees are afraid of punishment from regulators, they are likely to conceal information about their faulty decisions. This in turn distorts the...

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Delaware: The State Where Companies Can Vote

Hal Weitzman

Adapted from What’s the Matter with Delaware: How the First State Has Favored the Rich, Powerful, and Criminal—and How It Costs Us All, published...

ESG, Corporate Governance & Future of the Firm

Are “Bankruptcy Directors” Bad for Creditors?

Jared Ellias

A new paper studies the rise of so-called “bankruptcy directors,” typically former bankruptcy lawyers, investment bankers, or distressed debt traders who join corporate boards...

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Why Financial Regulations Might Fail to Produce Their Desired Outcome: The Case of the Capital Conservation Buffer

Hamid Mehran

The capital conservation buffer (CCB) was created after the 2008 financial crisis, instructing banks to retain their dividends in an escrow account and create a...

Antitrust and Competition

Big Tech, the FTC, and Ordoliberals: ProMarket’s Top Stories of 2021

ProMarket writers

As 2021 draws to a close, we look back at ProMarket’s most-read and most-widely shared stories of the past year. In a year marked by a...

Antitrust and Competition

The Best Political Economy Books of 2021

Asher Schechter

A scholarly examination of market’s power toll on American workers, the collected works of a pioneering economic thinker, an ambitious narrative of US economic...

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How Interest Groups Utilize Reverse Revolving Doors to Influence Legislative Voting

Miguel Alquézar Yus

A new study finds that legislators who worked for interest groups before taking office influence the voting behavior of their colleagues when the motion...

Antitrust and Competition

Unreliable Accounts: How Regulators Fabricate Conceptual Narratives to Diffuse Criticism

Karthik Ramanna

In 2010, as the world was reeling from the global financial crisis, the body that determines generally accepted accounting principles for listed corporations in...

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