Causes of Regulatory Capture:

1. Information Asymmetry: Regulators often rely on the industry for detailed information about operations, which can lead to a dependence on industry insiders for knowledge and expertise. This dependency can skew regulators’ perspectives in favour of the industry.
2. Revolving Door: There is often a revolving door between regulatory bodies and the industries they regulate, where individuals move back and forth between industry jobs and regulatory positions. This creates conflicts of interest, as regulators may be more inclined to favour the industry in hopes of future employment.
3. Lobbying and Political Pressure: Powerful industries exert influence over regulatory agencies through lobbying, campaign contributions, and other forms of political pressure, which can sway the rules and policies to favour their interests.
4. Regulatory Burden: Sometimes, the complexity of the industries being regulated (e.g., finance, energy, healthcare) makes it difficult for outside experts to effectively monitor and enforce regulations. This gives industries the upper hand, as they are often the only ones with the technical expertise to help shape regulations.