Define: Deregulation

Deregulation refers to the reduction or elimination of government regulations and restrictions on certain industries, markets, or economic activities. The aim of deregulation is to promote competition, efficiency, innovation, and consumer choice by removing barriers to entry, reducing bureaucratic red tape, and allowing market forces to dictate prices, products, and services. Deregulation can take various forms, including the relaxation or elimination of price controls, licensing requirements, trade barriers, and other regulatory constraints. While deregulation can lead to increased competition, lower prices, and greater efficiency in some cases, critics argue that it may also result in market instability, reduced consumer protections, and negative social or environmental impacts. The extent and impact of deregulation depend on the specific industry, regulatory context, and broader economic and political considerations.

Deregulation is an act by which the government regulation of a particular industry is reduced or eliminated in order to create and foster a more efficient marketplace. Deregulation is usually enacted to weaken government influence and forge greater competition. By this token, deregulation also creates an economic environment favourable to upstart companies that were unable to enter the industry prior to the passing of deregulation. It is also widely held that deregulation often serves as a catalyst for increased innovation and mergers among weaker competitors. Deregulation is often driven by lobbyists and lobbying groups that represent various industries and business interests. Industries that have undergone deregulation include communications, banking, securities, transportation, as well as power and utility. Although deregulation might purge government influence altogether, some government oversight usually remains.

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This glossary post was last updated: 29th March, 2024.