Article (Scientific journals)
A Theory of Soft Capture
Agrell, Per; Gautier, Axel
2017In Scandinavian Journal of Economics, 119 (3), p. 571-596
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Keywords :
Regulation; Capture; Information
Abstract :
[en] n this paper, wee propose a model for regulatory capture that is based on information transmission and asymmetric information. In a three-tier model, a regulator is charged by a political principal to provide a signal for the type of a regulated firm. Only the firm can observe his type and the production of a correlated signal with a given accuracy is costly for the regulator. The firm can costlessly provide an alternative signal of lower accuracy that is presented to the regulator. In a self-enforcing equilibrium, the regulator transmits the firm-produced signal, internalizes its own savings in information cost and the firm enjoys higher information rents. The main feature of soft capture is that it is not based on a reciprocity of favors but on a congruence of interests between the firm and the regulator.
Research center :
LCII - Liège Competition and Innovation Institute - ULiège
Disciplines :
Microeconomics
Author, co-author :
Agrell, Per
Gautier, Axel  ;  Université de Liège - ULiège > HEC-Ecole de gestion : UER > Economie industrielle
Language :
English
Title :
A Theory of Soft Capture
Publication date :
July 2017
Journal title :
Scandinavian Journal of Economics
ISSN :
0347-0520
eISSN :
1467-9442
Publisher :
Blackwell Publishing, Oxford, United Kingdom
Volume :
119
Issue :
3
Pages :
571-596
Peer reviewed :
Peer Reviewed verified by ORBi
Funders :
F.R.S.-FNRS - Fonds de la Recherche Scientifique [BE]
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