By way of clearing up two myths, we’ll begin to gain a deeper understanding of regulatory capture:
(1) We do not have free market Capitalism in the United States. We have what some call Corporatism and others call Crony Capitalism.
(2) “Corporation” is a government-protected entity, so: removing government means firms no longer have the following government-sanctioned benefits:
(a) Limited liability.
(b) Regulatory capture (where corporations write or influence regulation through bribery lobbying and revolving doors for CEOs/gov officials – to favor their company and make it hard for competitors and newcomers to enter the same industry). More on regulatory capture.
(c) Favoritism via government created laws.
(d) Favoritism via government granted contracts.
(e) Favoritism via government granted patents and copyrights.
(f) Tax breaks.
(g) Bailouts.
What about consumer protection?
Replace the “need” for government watchdogs. Think peer-to-peer review/reputation apps like Yelp and ConsumerReports.com, as well as how many others are including ratings in their apps, like AirB&B and Uber. I’m sure other, possibly better, watchdog apps and sites have sprung up. See Law & Security without Government.