In class last week, we discussed the theory of economic
regulation according to Stigler. This theory is called the “Capture Theory” and
it states that regulation is acquired, designed, and operated by an industry.
This theory is often an explanation for seemingly pointless and notably weird
laws. An industry will treat regulation as a resource and a rational firm will
seek this resource.
An example of one of the aforementioned laws states: “It
is illegal not to drink milk” in
Utah. A student at BYU recognizes the Capture Theory playing a role in the
dairy industry when he states,
“I think the dairy lobbyists have too strong of a foothold in the state of Utah.”
This student helps to explain that this regulation was not
created because of public interest, or because people do not behave rationally
in politics, but rather due to Stigler’s capture theory of economic regulation.
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