FHCE 5100 Lecture Notes - Lecture 5: Consumer Protection, Natural Monopoly, Market Power
10 Jun 2018
School
Course
Professor
Deregulation – Zick
Accordig to Zick…
− Government influence on the functioning of the private sector has grown to the point
where many people would call it pervasive
Deregulation
− Broad definition: the retraction of regulations designed to insure that minimal social
conditions are met; such as environment quality standards, worker safety, police
protection, etc.
Arguments FOR Deregulation
1. Technological or cost considerations may have previously suggested that it was most
efficient for there to be one seller in the marketplace (natural monopoly – TV, telephones,
savings & loans) that is regulated by the government
• HOWEVER, increased competition in these areas encourages the government to
deregulate and step outside instead
2. Small start up firms operating in certain industries need the protection of the government
initially to prevent destructive competition (eaple: start up airlies that ca’t copete
with Delta)
• HOWEVER, as the company becomes more stable, the need for government
regulation decreases and the call for deregulation increases
Supporters of Deregulation
− Economists
− Politicians
• Both politicians and economists suggest that government imposition in the
marketplace discourages competition
− Consumer Advocates
• Favor deregulation that expands consumer choice and promotes greater price
competition
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