Suppose the competitive market structure allows these changes to occur at a lower cost. If the beer industry is competitive, it is dynamically efficient. Suppose ABC Corporation produces at a higher cost than the otherwise identical DEF Corporation. DEF Corporation would be X-efficient. According to capture theory, it is special interests, not public interests, that capture the benefits of government intervention.
Capture theory poses a challenge to the premise of antitrust policy.
The proponents of this theory argue that antitrust policy has simply been a means of transferring wealth. There is little interest in achieving efficiency when using these policies. If correct, capture theory mitigates the case for govermnent intervention in the case of market power. The answer will depend on the student's point of view. The student may believe that the market-determined distribution of income is fair in the sense that it reflects rewards according to how much individuals contribute to national output.