Deregulation of Markets
Deregulation of markets refers to the reduction or removal of government regulations and restrictions on industries and businesses. This is often done to promote competition, increase efficiency, and lower prices for consumers. Deregulation can lead to more innovation and investment in the affected industries, but it can also result in challenges such as market volatility and potential negative impacts on workers and the environment.
5 Key excerpts on "Deregulation of Markets"
eBook - ePubGood Regulation, Bad Regulation
The Anatomy of Financial Regulation
- Imad A. Moosa(Author)
- 2016(Publication Date)
- Palgrave Macmillan(Publisher)
...3 Regulation, Deregulation and Financial Crises 3.1 The Free-Market Doctrine The tendency to deregulate financial markets and institutions is driven by strong belief in laissez-faire, the free-market doctrine. In general, this doctrine implies a structure whereby the production, distribution and pricing of goods and services are coordinated by the market forces of supply and demand, unhindered by regulation and government intervention. An economy that is composed entirely of free markets is referred to as a free-market economy. The origin of the concept of a free market is traced by Gray (2009) to mid-nineteenth century England. The Love Affair with the Market The tendency to follow the rules dictated by the market can be justified on the following grounds: (i) a free market acts as a coordinator of independent decisions pertaining to the production and consumption of millions of market participants; (ii) it performs the function of coordinating decisions without anyone having to understand how it works; (iii) it determines a distribution of the total income it generates; and (iv) it creates a product life cycle, leading to regular emergence of new products. Free marketeers contend that the market is the best coordinator, that it is a producer of growth, that it decentralises power (and thus involves less coercion), and that market-determined prices are related to costs. The formal case for a free market is that it would lead to an optimal allocation of resources and hence efficiency, in the sense that no one can be made better off without simultaneously making someone else worse off. The modern economist who more than anyone else popularised the concept of free market and sold it successfully to politicians (and to the public at large through popular media) was Milton Friedman...
eBook - ePubThe Telecommunications Revolution
Past, Present and Future
- Harvey M. Sapolsky, Rhonda J Crane, W Russell Neuman, Eli M Noam, Harvey M. Sapolsky, Rhonda J Crane, W Russell Neuman, Eli M Noam(Authors)
- 2018(Publication Date)
- Routledge(Publisher)
...The price cap concept is unnecessary. Either it will not make any difference or it will turn into a great morass of trying to calculate things that are impossible to calculate – for example, the costs of an individual service where you compete network to network. There is the risk that we will find ourselves in an expensive mess where only the lawyers will be the winners. As for the benefits of deregulation, many regulators think of them primarily in terms of prices. The perspective is of static efficiency and price-cost margins. Will AT&T rip off poor grandma on the farm? Much evidence in economics, however, suggests that these are not the first order of problems in thinking about deregulation. There are essentially two main benefits of deregulation. The first is of strategic heterogeneity. Deregulation allows firms to choose different strategies, to offer different bundles of service, to have different mixes of cost and differentiation. That kind of variety is enormously beneficial from an economic standpoint. The second and even more important benefit of deregulation is in promoting dynamic efficiency of progressiveness or innovativeness. Research compellingly indicates that innovation is what really matters, not the price-cost margin. And yet, we concentrate on the price-cost margin and ignore how regulatory changes might affect innovation. Given the breathtaking technological changes in this industry, the real action is obviously in innovation; and so regulators must figure out how to ensure that innovation takes place. What general conclusions can we draw? The issues I have raised are endemic to all regulation. They exist in electric power, energy, airlines, and a host of other sectors. The tendency is strong to view competition narrowly and inadequately when we assess how to deregulate, and whether and how to continue doing so...
eBook - ePubCompetition and Regulation in the Airline Industry
Puppets in Chaos
- Steven Truxal(Author)
- 2013(Publication Date)
- Routledge(Publisher)
...3 Deregulation, liberalization and re-regulation Introduction The primary aim of this chapter is to discuss and clarify the concepts of ‘deregulation’ and ‘liberalization’. This will proceed with regard to the influences leading to their construction and to the extent to which they have contributed to the commercial measures taken by airlines from an international perspective, which is essential given the international dimension of the industry. This chapter also details and criticizes the application of competition rules in the EU and US sectors vis-à-vis restrictions on foreign ownership, antitrust legislation, concerted practices and collusive activities, price discrimination and the abuse of a dominant position. The scope of this study is the EU and US air transport sectors. Although it is accepted that many industries have been deregulated, privatized and liberalized 1 worldwide over the past few decades, it is in the airline industry that one observes the unique phenomenon of intense cooperative manoeuvring. As Hanlon remarks: One of the most striking results of deregulation is the impetus it gave to the level of activity in airline mergers and acquisitions. The constraints imposed in bilateral agreements and the restrictions placed on foreign ownership meant that most of this activity has taken place within national boundaries. 2 Alongside the freeing up of markets and reduction of government intervention, there has been a significant trend towards industry-wide cooperation between many firms in the deregulated sectors. This cooperation has generally taken the form of a variety of contractual arrangements to integrate through joint ventures, tactical or strategic alliances and mergers...
eBook - ePub- Rob Dransfield(Author)
- 2013(Publication Date)
- Routledge(Publisher)
...relating to how firms can and cannot compete in the water industry) to detailed regulations (e.g. relating to the control of emissions from power stations and other energy suppliers in the energy industry). Examples of regulations include permits, quotas, quality standards and price controls. A key aspect of government regulation of business behaviour in markets is to ensure that consumers are not harmed by firms abusing their size in the market. From a competition perspective regulations should be framed in such a way as to minimize regulation while maximizing the benefits of competition. Regulations on price, quantity and who can enter a market will have a direct impact on competition. For example, imposing a minimum price restricts price competition between suppliers. A key issue relating to regulation is that of ‘regulatory capture’. This is where regulations have the outcome of benefitting firms in the industry being regulated rather than the wider public. Regulators need to be aware of this issue and seek to take mitigating actions to prevent this from occurring. Subsidies and taxation The government subsidizes some business and activities and taxes others. Subsidies and taxes distort costs. Subsidies reduce costs to a supplier and taxes raise costs. Examples of subsidies are tax exemptions for business, soft loans (at low rates of interest) and direct grants. Subsidies can distort markets in a number of ways – for example, by enabling inefficient firms to continue in the market, by enabling some firms to gain a disproportionate (monopoly) share of a market, and by creating other inefficiencies and market restrictions...
eBook - ePubA History of Enterprise Policy
Government, Small Business and Entrepreneurship
- Oliver Mallett, Robert Wapshott(Authors)
- 2020(Publication Date)
- Routledge(Publisher)
...9 Market Liberalisation and Deregulation The UK government’s shift towards small government and market liberalisation led to significant changes in the development and delivery of enterprise policies. This chapter will explore two areas in which the government sought to tackle rising unemployment and to spur new and growing small businesses for wider job creation and economic growth. Firstly, we discuss the development of new approaches to regional policy in relation to the retreat of government, both in terms of regeneration areas with low regulation and taxation (enterprise zones) and new, private sector–led regional bodies (Local Enterprise Agencies). The second focus in this chapter is the national-level attempts to remove regulation to support a free market economy. Business start-up and small business growth in particular have been highlighted as important rationales for deregulation, and this chapter will discuss these policy initiatives in relation to enterprise policy. The chapter will analyse high-profile commitments from the Conservative governments of the 1980s and 1990s to remove the ‘burdens’ of regulation and to improve the institutional environment in which to start-up and grow a small business. The Conservative Government The newly elected Thatcher government, with an emphasis on reducing inflation and cutting taxes to ‘incentivise’ work, quickly saw unemployment rise to levels of 3 million people, numbers not seen since the interwar years. Contemporary commentators highlighted the impacts of ‘de-industrialisation’ (with significant decreases in manufacturing investment and productivity) that were occurring as a result together with, in the first nine months of 1980, 5000 company liquidations, the majority of which were small businesses (Coutts et al., 1981: 86). There was disquiet in Cabinet that Thatcher was too right wing, perhaps reflecting some of the same concerns that had led Heath to perform his famous u-turn...
