Tripartism: Regulatory Capture and Empowerment

Abstract

The features of regulatory encounters that foster the evolution of cooperation often also encourage the evolution of capture and corruption. Solutions to the problems of capture and corruption—limiting discretion, multiple-industry rather than single-industry agency jurisdiction, and rotating personnel—inhibit the evolution of cooperation. Tripartism—empowering public interest groups—is advanced as a way to solve this policy dilemma. A game-theoretic analysis of capture and tripartism is juxtaposed against an empowerment theory of republican tripartism. Surprisingly, both formulations lead to the conclusion that some forms of capture are desirable. The strengths from converging the weaknesses of these two formulations show how certain forms of tripartism might prevent harmful capture, identify and encourage efficient capture, enhance the attainment of regulatory goals, and strengthen democracy. While the case we make for tripartism is purely theoretical and general in its application to all domains of business regulation, our conclusion is a call for praxis to fish out the contexts in which the theory is true or false.