And a perfect example of how regulatory capture works. I don't have a solution, but I am convinced that over time this is the end result of ANY regulation. It doesn't matter what the original intent is/was.
I look it as an evolutionary system, an arms race. Capture will happen if the regulators don't keep up.
But it's possible to keep up. US financial markets have a lot of internal regulation for traders, so they're wrangling some of the most aggressive do-anything-for-a-buck people on the planet. Nonetheless, the traders are generally kept in check. I used to do tech for derivatives traders and we knew to never, ever fuck around with a market.
That didn't always stop our traders, of course. We had some based in Frankfurt who hated living there. They decided they wanted to live in London, and so quietly shifted their trading terminals to our London office. This was strictly forbidden; at least at the time, the mid-90s, trading on the Deutche Terminborse was to take place on German soil and nowhere else.
Eventually the regulators got suspicious and so they were standing outside ringing the bell while watching our trading activity. So one of my technical colleagues had to rent a van, load everything up, drive it 10 hours back to Frankfurt, and have it all working by the next morning. Which we did, and so avoided formal sanction, but it was close. That probably kept those traders from doing something foolish for at least another year.
It was them getting kept in check, because they quickly corrected the behavior. And as far as I know, never repeated it. Explicit punishment is not the only way policing happens. Indeed, I think the most important parts happen well before that.
> standing outside ringing the bell while watching our trading activity
Do you mean ringing manually the bell of the end-of-the-day of the stock exchange? When they rang it the first time, didn’t they catch them not going out of the building?
I mean they rang the doorbell. They could see that the traders were active, meaning that they were supposedly in the office. But the door was locked and nobody answered it.
That isn’t what regulatory capture means. Regulatory capture has to do with industry vs public rather than big co vs little co.
Regulatory capture is an economic theory that regulatory agencies may come to be dominated by the interests they regulate and not by the public interest. The result is that the agency instead acts in ways that benefit the interests it is supposed to be regulating.
In this case, the small-co or independent inventor acts as a member of the public.
It's really about established players being able to invest in controlling the regulators that are specific to them, while new players considering entering obviously don't have this advantage. Structurally it's similar to NIMBYism.
As another commenter suggested, let's look at the data from the USPTO and see what the submission/approval ratio looks like for large cap, small cap, and independents before jumping to conclusions...
