Final answer:
Regulatory capture is when regulated firms influence regulators to create beneficial regulations for themselves, often at the public's expense. The significance of regulatory commissions lies in their intended role to enforce fair regulations and competition, but they can be undermined by regulatory capture.
Step-by-step explanation:
The problem of regulatory capture occurs when firms that are supposed to be regulated heavily influence or control the regulatory agencies, leading to regulations that serve the interests of the firms rather than the public. This is significant because it can result in price regulations serving to protect existing firms, reduce competition, maintain higher prices, and limit output, rather than protecting consumers as intended. Regulatory commissions are significant as they are established to enforce regulations and promote fair competition; however, their effectiveness can be compromised by regulatory capture.
Discussing the effects of deregulation highlights industries that have shifted from strict regulatory oversight to a more open market model, often to increase efficiency, promote competition, or respond to changes in technology or market conditions. Examples in the United States include the airline, telecommunication, and energy industries.