00:01
Hey everyone.
00:03
Today we're answering a question about regulatory capture and how it reduces persuasiveness for the consumers essentially and it doesn't help the consumers.
00:15
So i just thought it would be helpful to define regulatory capture.
00:18
This is a mini paragraph in our textbook.
00:21
And it says one difficulty with government price regulation is what economists call regulatory capture in which the firms that are supposedly regulated end up playing a large role in setting the regulations that they will follow.
00:36
So this means that they're becoming more monopolistic in nature.
00:40
When the airline industry was regulated, for example, it suggested appointees to the regulatory board, since lobbyists argue with the board provided most of the information on which the board made decisions and offered well -paid jobs to at least some of the people leaving the board.
00:56
In this situation, it is easy for regulators to poorly represent consumers.
01:02
So we can clearly see from these this example of the airline industry how, you know, lobbying and then providing more most of the information on which the board makes decisions and stuff like that.
01:16
That is not representing consumers the best.
01:19
And the results is mainly why...