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Deregulation

Explore the impact of deregulation in industries like airlines and telecommunications, examining the effects on competition, pricing, and consumer benefits. Discover the positives and negatives of deregulatory reform, and its effects on market forces and technological innovation.

charleshamilton
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Deregulation

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  1. Deregulation

  2. I. Deregulation or regulatory reform: cutting back on government regulation  II. Areas that have been deregulated A. Airlines. 1. Before 1978, the airline industry was regulated. For example, the Civil Aeronautics Board controlled rates and fares to protect the industry from excessive competition. As a result, all airlines charged the same rates and fares. 2. In 1978, Congress passed legislation that 1) led to the phasing out of the CAB, and 2) allowed airlines to set whatever rates and fares they wished.

  3. 3.Effects of airline deregulation: a. Due to competition, some airlines went bankrupt. b. Some smaller cities lost airline service as airlines found it unprofitable to provide service to them. c. Concern that airlines have “cut corners” in safety and maintenance to keep up with the cutthroat competition. d. On the up side, rates and fares have come way down, and more people are able to travel by air than before. B. Telecommunications: Telecommunications Act of 1996 1. This increased competition among phone, cable, and other communications companies. 2. These companies were allowed to compete in the others’ core businesses.

  4. III. Evaluation of deregulation: Positives:         A. Restores natural market forces in pricing, efficiency, resources.         B. Encourages competition.         C. Encourages technological innovation. D. Lower costs for industry, and lower prices for consumers. Negatives: Due to our federal system, states will continue to regulate business. This produces even more confusion: Under national regulation, there was generally only one set of regulations; now, with deregulation, companies may have to deal with 50 different sets of regulations.

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