How do incumbents use regulation to block rivals?

Lens adapted to this topic: Claims that incumbents strategically use regulation to raise rivals’ costs

The capture-oriented view emphasizes regulation as a competitive strategy. Incumbents may lobby for rules whose fixed costs, approval requirements, or access restrictions are easier for established firms to bear than for entrants. They can also work through multiple political and regulatory institutions and frame their preferred rules as consumer protection or public interest. This perspective is strongest where the rule’s costs fall disproportionately on smaller or newer rivals.

• Incumbents may support special-interest regulation that raises rivals’ costs and transfers economic rents toward established firms.
• Large firms can target multiple government institutions to obtain more favorable regulatory decisions than would otherwise occur.
• Institutional actors such as regulators and courts can protect incumbents by hindering entrepreneurs seeking to introduce new products or services.
• Strict regulation may impose high fixed costs that smaller, less-profitable firms struggle to absorb, reducing competition.
• A regulatory system can restrict entry and grant approved firms shared monopoly privileges, producing an appearance of competition while suppressing alternatives.

Featured sourceA Bidding Analysis Of Special Interest Regulation: Raising Rivals' Costs In A Rent Seeking Societyftc.gov6 sourcesView sources