When Regulators Fail: Exploring the Mechanisms of Regulatory Capture

Although regulatory capture has been extensively theorised and ostensibly empirically documented, evidence of causal relationships between industry influence and regulatory outcomes is severely lacking. This paper argues that we need to develop process theories of how regulated industries manage to excessively influence regulatory decision-making in order to study capture. It makes a first step in this direction by developing four theoretical causal mechanisms of how capture may happen, based on the most prominent causes of capture identified in the literature. These process theories are applied to the Vioxx drug scandal, widely regarded to be a result of capture. By using process-tracing methodology to dissect regulatory decision-making on Vioxx, it shows that evidence does not substantiate any of the ostensibly well-known mechanisms of capture. The analysis focuses on the role of the UK drug regulator in licensing and monitoring a drug that likely caused hundreds of thousands of heart attacks before it was taken off the market in 2004. By opening up the black-box of empirical capture research, the paper highlights the problematic consequences of (mis-)diagnosis of regulatory capture by scholars, the media and policy-makers.