Question

Define the meaning of deregulating an industry and give a brief explanation as to why the government might regulate an industry in the first place

Answer 1

Deregulation is when government restrictions on industries are reduced or eliminated, often with the aim of making business easier. It removes a regulation which interferes with the ability of firms to compete, in particular overseas. Consumer groups can also prompt deregulation if they feel that their interests are not served by the regulation. They can also aim to abolish regulations if they find their regulatory authorities too friendly with business leaders.

Regulation is made up of conditions that the government places on private businesses and individuals to achieve the objectives of policy. These include better and cheaper services and goods, protection from "unfair" (and fair) competition from existing companies, cleaner water and air, and healthier workplaces and products. Failure to comply with the regulations can lead to fines, orders to stop doing certain things or even criminal penalties in some cases.

Regulation curtails or gives special rights to market participants. Regulations include rules on how goods and services can be marketed; what rights consumers must demand refunds or replacements; safety standards for products, workplaces, food and drugs; mitigation of environmental and social impacts; and a given participant's level of control over a market can be assumed.

A regulated market is a market in which a degree of oversight and regulation is exercised by government agencies or, less generally, business or labor groups. Market regulation is mostly government-controlled and includes deciding who may enter the market and the rates that they can ask for. The primary function of the government entity in a market economy is to regulate and monitor the financial and economic system.