Elite capture

Elite capture is a form of corruption whereby public resources are biased for the benefit of a few individuals of superior social status, often damaging the welfare of the larger population. Elite capture occurs when elites use public funds, originally intended to be invested in services that benefit the larger population, to fund projects that would only benefit them. This form of corruption is differentiated from outright criminal corruption such as embezzlement, misappropriation, or other diversion of funds by a public official.

Elite capture is related to information asymmetry, inefficient regulation or inefficient allocation of resources. This causes resources to be siphoned by elite middlemen through legal practices such as noncompetitive tender of contracts, excessive pricing, and overcharging, which reduce the proportion of a government project's budget being spent on the declared mission. This causes a biased distribution of a public good or service, resulting in a situation wherein certain segments of the population experience reduced access to them. In this context, as long as there is elite capture, the welfare impact will not be Pareto optimal nor equitable.