Deregulation
- Created by: audreyhorne123
- Created on: 12-01-20 15:21
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- Deregulation
- Removing government legislation and laws in a particular market.
- Often removing barriers to competition.
- Often accompanied with privatisation
- Advantages
- Increased competition acts as a spur to greater efficiency, leading to lower costs and prices for consumers
- Increased number of firms, allowing lower prices for consumers, particularly with low-cost airlines and falling prices of telephone calls.
- Reduces beaucracy
- Greater consumer choice
- Disadvantages
- It can be difficult to create effective competition in an industry which is a natural monopoly – high barriers to entry. Deregulation may create a private firm with monopoly power.
- In the local bus market, deregulation often led to duplication of services and the problem of congestion.
- New private firms will seek to cherry-pick the most profitable routes and times and leave out the unprofitable off-peak services.
- Private firms may seek to maximise profits instead of consumer welfare
- Deregulation in train services led to the process of franchising where companies were awarded contracts for a particular time period. There is competition in the bidding process but no guarantee firms will live up to their promises. The government had to take over a failing private firm on a number of occasions.
- Removing government legislation and laws in a particular market.
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