A Theory of Soft Capture
(2017) The Scandinavian journal of economics — Vol. 119, n° 3, p. 571-596 (2017)
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- Abstract
- This paper proposes an alternative model for capture that it is not based on reciprocity but on congruence of interests between the firm and the regulator. A regulator is charged by a political principal to provide an imperfect signal for the type of a regulated firm. Only the firm can observe its type and the production of a signal is costly. The firm can provide a costless alternative signal of lower accuracy to the regulator. In a self-enforcing equilibrium, the regulator transmits the firm-produced signal, saves information gathering cost and the firm enjoys higher information rents.
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Citations
Agrell, P. J., & Gautier, A. (2017). A Theory of Soft Capture. The Scandinavian journal of economics, 119(3), 571-596. https://doi.org/10.1111/sjoe.12171 (Original work published 2017)