Effective Regulation of Public Utilities
Agencies do not need to conduct experiments in order to rely on the prediction that an unsupported stone will fall.
Associated Gas Distributors v. FERC, 824 F.2d 981, 1027 (D.C. Cir. 1987) (finding that regulators need not conduct factual hearings to learn that monopolists will act in their self-interest)
"Regulatory Capture": Sources and Solutions
Regulatory capture is neither corruption nor control. Corruption and control are actions of the regulated entity. Regulatory capture is characterized by the regulator’s attitude, not the regulated entity’s actions. A regulator is “captured” when he is in a constant state of “being persuaded”: persuaded based on a persuader’s identity rather than an argument’s merits. Regulatory capture is reflected in a surplus of passivity and reactivity, and a deficit of curiosity and creativity. It is evidenced by a body of commission decisions or non-decisions—about resources, procedures, priorities, and policies, where what the regulated entity wants has more influence than what the public interest requires.