Activists versus Captured Regulators
CESifo, Munich, 2013
CESifo Working Paper No. 4444
![](https://cesifo.org/DocImg/cesifo1_wp4444.jpg?c=1689236928)
We analyze the consequences of activism in a regulated industry where the regulator has been captured by the industry. Unlike ordinary economic agents, activists are insensitive to monetary incentives. Moreover, they are less well informed than regulators and their actions generate dead-weight costs. Yet we find that activism may increase social welfare because it disciplines captured regulators and reduces the social cost of imperfect regulatory systems.
Industrial Organisation