‘Corrosive Capture’ in Theory and Practice : What is Discussed and How to Prevent It

Regulatory capture has recently been defined as ‘the result by which regulation, in law or application, is consistently or repeatedly directed away from the public interest and toward the interests of the regulated industry, by the intent and action of the industry itself’. In excellent contrast to conventional capture theory, the concept of ‘corrosive capture’ argues that deregulation is no longer a panacea for emerging regulatory capture. This paper first reviews theoretical proposals for preventing capture such as by dividing power across multiple regulators, empowering consumers, promising diffuse interests, and conducting executive reviews of regulations based on cost-benefit analysis. Subsequently, the framework is applied to a Japanese case of regulations on drug sales through the Internet. The case study shows that values and sources of independent expertise are quite diverse in Japan, but the Supreme Court is somewhat hesitant, or more passive than expected in theory, to express substantial objections in regulatory affairs. Executive coordination and the Regulatory Reform Council in the Cabinet, chaired by a private entrepreneur, can free captured regulations from vested interests and make them more effective, although the notion of ‘public interest’ has not been clearly defined in the regulatory space