Regulatory Capture Pattern (Extended Stigler)

George Stigler's theory that regulatory agencies, created to protect the public interest, are eventually captured by the industries they regulate and begin serving industry interests instead. The capture mechanism: (1) the industry has concentrated, permanent interest in regulation (profits depend on it), while the public has diffuse, intermittent interest, (2) the industry invests heavily in influencing the regulator (lobbying, revolving door employment, information provision), (3) regulators become dependent on industry for information, expertise, and post-government employment, (4) regulations gradually shift from protecting the public to protecting industry incumbents (through barriers to entry, favorable standards, and lenient enforcement). The extended model adds cultural capture: regulators begin to see the world through the industry's lens, genuinely believing that what's good for the industry is good for the public. This is more dangerous than corruption because it's invisible to the captured. The FDA/pharmaceutical, FAA/airline, and SEC/finance relationships all demonstrate varying degrees of capture.

When to use it

When evaluating whether regulations actually serve their stated purpose. When industry strongly supports specific regulations (which may indicate the regulations protect incumbents). When observing regulatory leniency despite clear violations. When designing regulatory structures.

How it can help

Provides a diagnostic framework for evaluating whether a regulatory body is serving the public or the regulated. Indicators of capture: (1) revolving door between regulator and industry, (2) regulations that primarily burden new entrants while grandfathering incumbents, (3) enforcement actions that are rare, small relative to profits, and treated as cost of business, (4) regulator adopting industry framing and language, (5) public interest groups having less access than industry lobbyists. Prevention requires: structural independence (funding not from industry, no revolving door), transparency (all industry contact logged and public), and adversarial design (separate bodies for standard-setting and enforcement).