A Theory of Soft Capture

Per Agrell () and Axel Gautier ()

Scandinavian Journal of Economics, 2017, vol. 119, issue 3, 571-596

Abstract: In this paper, we propose an alternative model for capture that is based not 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 and saves information‐gathering costs, and the firm enjoys higher information rents.

Date: 2017
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Citations: View citations in EconPapers (2)

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https://doi.org/10.1111/sjoe.12171

Related works:
Working Paper: A Theory of Soft Capture (2017)
Working Paper: A theory of soft capture (2017)
Working Paper: A Theory of Soft Capture (2011)
Working Paper: A theory of soft capture (2010)
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