What Is Market Deregulation?

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Deregulation is the sometimes controversial process of reducing the amount of control government agencies exert over private industry. While no one would argue that all market regulation should be eliminated, the controversy arises when society attempts to balance consumer and business interests with regard to protection, safety, pricing and quality.

Deregulation in Action

Regulations frequently limit competition, create barriers to entry and support high prices. When regulations are reduced or eliminated, the result is less reporting, fewer controls, usually lower prices, more competition and more innovation. When the airlines were deregulated in 1978, the result was more airlines, more passengers, more competition and lower rates. When the trucking industry was deregulated in 1980, shipping rates fell by 20 percent and inefficient shippers were driven out of business. Natural monopolies – utilities, for example – remain regulated as of 2014. That's because they could potentially abuse their power in an unfettered market to the detriment of their customers with poor service or high rates.

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