The Regulatory Dance

In mixed economies, regulation is the main instrument for balancing market freedom with the public interest. Good regulation creates fair competition and protects consumers. Bad regulation happens when the industries being regulated gain enough influence over their regulators that the rules end up serving industry interests instead of the public's — a problem economists call regulatory capture. Captured rules often become bureaucratic barriers that shield existing businesses from new competition.

Capture happens quietly. Banks help write banking rules. Energy companies shape environmental standards. Each time, the regulated industry nudges the rules toward its own interests instead of the public's, and innovation and competition slowly suffer.