Economic Interest Theory and Regulation
The theory suggests that regulations are set of policies driven by forces of supply and demand. The government is placed on the supply side while the interest groups on the demand side. The theory suggests that regulation is developed by the industry and that the objective of regulations is to create advantages to the industry concerned. This theory was developed in 1971 by Chicago theory of government and the economic theory of regulation (J. G. Stigler, The Theory of economic regulation, n.d. pg 4).

Characteristics of economic interest theory
The theory suggests that it is the industry which designs the regulations to be adopted in the market. The industry sets the regulations for the benefit of its members (J. Hertog, General Theories of Regulation, 1999, pg236). It also operates these regulations and there are no external mechanisms involved. The government allows the stakeholders in the industry to participate in decision making concerning economic matters that affect the sectors of the economy. The theory suggests that the representative groups in the government decision making should be small in size so as to reduce the running costs. The theory suggests that producers can organize themselves more readily than consumers. It suggests that producers can easily regulate their activities faster compared to the consumers. The theory suggests the phenomena of cross-subsidization. This is where regulations which have been put across benefit some groups more than others (L. Loevinger, Antitrust, Banking and Competition. 1985, pg 584).

Advantages of economic interest theory
The industry concerned is allowed to make its own rules and regulations. The role of the government is to enforce the regulations that have been designed by the industry. The government uses the regulations to achieve its national economic goals. For