Brighter and Darker Sides of Intermediation

This article addresses two specific puzzles in the area of regulation. The first is the engagement of regulatory intermediaries by the targets of regulation. The second is a tendency for regulatory intermediaries, once added to the regulatory landscape, to expand their roles independently and for reasons of self-interest. The article offers important insights into the roles, opportunities, and constraints of regulatory intermediaries, particularly because it moves beyond the unidirectional understanding of the regulatory process that is at the base of the RIT model. After exploring both puzzles, the article discusses how (target-oriented or self-interested) intermediation may increase the complexity and impact of regulatory capture. It concludes, however, that while the model of intermediation is sometimes flawed, regulators and targets are generally better off with the involvement of regulatory intermediaries than without it.