deregulation

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Deregulation

The reduction of government's role in controlling markets, which lead to freer markets, and presumably a more efficient marketplace.

Deregulate

To reduce the amount of regulation over a market or economy. It may include reduced or eliminated requirements for reporting or filing statements with regulators. Deregulating may allow an organization to conduct more activities than it could before; for example, it may allow a bank to make more high risk investments. Deregulation is intended to increase efficiency in the market by letting the Invisible Hand guide the economy apart from government intervention. Opponents, however, argue that deregulation increases the likelihood of fraud and unfair practices such as insider trading. Many analysts agree that deregulation helps firms on solid financial footing and hurts those that are not.

deregulation

The act of removing controls from some sector of the economy. In nearly all cases, deregulation of a given industry has both positive and negative implications for investors. Typically, firms in a strong financial position benefit from deregulation, while firms in a weak financial position suffer.

deregulation

the removal of controls over a particular economic activity which have been imposed by the government or some other regulatory body, for example an industry trade association. Deregulation may be initiated either because the controls are no longer seen as necessary (for example the ending of PRICE CONTROLS to combat inflation); or because they are over-restrictive, preventing companies from taking advantage of business opportunities (for example the ending of most FOREIGN EXCHANGE CONTROLS by the UK in 1979 designed to liberalize overseas physical and portfolio investment).

Deregulation has assumed particular significance in the context of recent initiatives by the UK government to stimulate greater competition by, for example, allowing private companies to compete for business in areas (such as local bus services) hitherto confined to central government or local authority operators. The Government has also initiated programmes of deregulation in the employment protection field, because it believes that extensive regulation imposes an unwelcome burden on business, stifling flexibility and inhibiting the action of market forces.

Conversely, government initiatives can be seen to have promoted regulation in so far as they have imposed rules on how trade unions should conduct their affairs (see TRADE UNION ACT 1984). Also, paradoxically the privatization of nationalized industries has in some cases led to greater regulation of their activities, because public pressure has necessitated the creation of regulatory agencies to ensure that private monopoly status is not abused at consumers' expense. For example, Ofgas regulates the gas industry and Oftel the telecommunications industry See REGULATION, NATIONALIZATION VERSUS PRIVATIZATION, EMPLOYMENT ACT 1989.

deregulation

the removal of controls over economic activity that have been imposed by the government or some other regulatory body (for example, an industry trade association). Deregulation may be initiated either because the controls are no longer seen as necessary (for example, the ending of PRICE CONTROLS to combat inflation) or because they are overly restrictive, preventing companies from taking advantage of business opportunities; for example, the ending of most FOREIGN EXCHANGE CONTROLS by the UK in 19 79 was designed to liberalize overseas physical and portfolio investment.

Deregulation has assumed particular significance in the context of recent initiatives by the UK government to stimulate greater competition by, for example, allowing private companies to compete for business in areas (such as local bus and parcel services) hitherto confined to central government or local authority operators. See COMPETITIVE TENDERING.

Conversely, government initiatives can be seen to have promoted regulation insofar as, for example, the PRIVATIZATION of nationalized industries has in some cases led to greater regulation of their activities via the creation of regulatory agencies (such as Ofgas in the case of the gas industry and Oftel in the case of the telecommunications industry) to ensure that the interests of consumers are protected.

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