Deregulation - Overview

Overview

The stated rationale for deregulation is often that fewer and simpler regulations will lead to a raised level of competitiveness, therefore higher productivity, more efficiency and lower prices overall. For example the Financial Times Lexicon states that deregulation in the sense of a substantial easing of government restrictions on industry, is normally justified in order to promote competition.

Opposition to deregulation may usually involve apprehension regarding environmental pollution and environmental quality standards (such as the removal of regulations on hazardous materials), financial uncertainty, and constraining monopolies.

Regulatory reform is a parallel development along side deregulation. Regulatory reform refers to organized and ongoing programs to review regulations with a view to minimizing, simplifying, and making them more cost effective. Such efforts, given impetus by the Regulatory Flexibility Act of 1980, are embodied in the United States Office of Management and Budget's Office of Information and Regulatory Affairs, and the United Kingdom's Better Regulation Commission. Cost-benefit analysis is frequently used in such reviews. In addition, there have been regulatory innovations, usually suggested by economists, such as emissions trading.

Deregulation can be distinguished from privatization, where privatization can be seen as taking state-owned service providers into the private sector.