What Is Regulatory Capture

question 170

Multiple Choice

What is regulatory capture?

• A)It is a situation in which a policymaker seeks to improve his election prospects by aligning himself with a powerful special interest group which will finance his political campaign.
• B)It is the exchange of political support between a regulatory agency and the regulated firm resulting in both parties capturing economic rents.
• C)It is a situation in which a firm being regulated successfully influences the regulatory agency's actions to benefit the interests of the firm, rather than the public interest.
• D)It is a situation in which a regulatory agency uses its authority to force actions that are not favored by the regulated firms but are in the public's interest.

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Definitions:

Best-subsets Regression

A statistical method in regression analysis that evaluates all possible combinations of variables to identify the model that best fits the data.

Bonferroni Criterion

A statistical adjustment method used to reduce the chances of obtaining false-positive results (Type I errors) when multiple hypothesis tests are conducted.

Degrees of Freedom

Degrees of freedom in statistics signify the number of values in a calculation that are free to vary without violating any imposed constraints.

Cp

Cp, or process capability index, is a statistical measurement of a process's ability to produce output within specified limits.