George Stigler

George Stigler (1911–1991) was an American economist and the 1982 Nobel laureate in Economics, awarded for his foundational work on the economics of information and the theory of regulatory capture. Stigler's 1971 article The Theory of Economic Regulation demolished the assumption that regulation serves the public interest, demonstrating instead that regulatory agencies are systematically captured by the industries they regulate. The argument was not based on moral critique but on economic logic: the benefits of regulation are concentrated in the regulated industry, while the costs are diffused across the public, giving the industry a powerful incentive to organize and capture the regulator.

Stigler's work on information economics showed that markets are not frictionless mechanisms but information-processing systems in which the cost of information determines market structure, pricing behavior, and competitive dynamics. This connects to the Coase theorem: if transaction costs are high because information is expensive, the market cannot reach the efficient outcome that the theorem predicts. Stigler and Ronald Coase were both members of the Chicago school of economics, though Stigler's emphasis on capture and information asymmetry added a darker realism to the Chicago school's generally optimistic view of markets.

Stigler did not prove that regulation is bad. He proved that regulation is predictable, and the prediction is not flattering.