The article by Per J. Agrell and Axel Gautier: “A theory of soft capture” has been published in the Scandinavian Journal of Economics.
The publication is available here.
Abstract:
In this paper, we propose an alternative model for capture that is based not on reciprocity but on congruence of interests between the firm and the regulator. A regulator is charged by a political principal to provide an imperfect signal for the type of a regulated firm. Only the firm can observe its type, and the production of a signal is costly. The firm can provide a costless alternative signal of lower accuracy to the regulator. In a self-enforcing equilibrium, the regulator transmits the firm-produced signal and saves information-gathering costs, and the firm enjoys higher information rents.
