An important focal point for the study of regulatory capture has long been the economic theory of regulation. In a nutshell, this theory posits that regulatory capture indicates regulatory output that deviates from the public interest because regulatory agencies are too dependent on the regulated industry. It is therefore in their interest to positively respond to industry demands for regulation that suits their narrow business interests rather than the public interest. Yet to validly designate a case of regulatory output as regulatory capture based on these frameworks, we need to establish several conditions to collectively hold. First, we should observe regulatory output that deviates from the public interest. Second, we should find evidence of regulatory lobbying aimed at influencing regulatory output in favor of a narrow set of business interests. Third, we should observe agency decisions driven by agency self-interest to positively respond to regulatory lobbying. This.
