Regulation and Deregulation Examples of Government RegulationInvolvement in

Regulation and Deregulation

Examples of Government Regulation/Involvement in Your Life: l Taking a shower: The water that flows from your showerhead has been analyzed by your local water department to be sure it is safe. l Brushing your teeth: A government agency assured that the ingredients in your toothpaste are safe and that it was packaged safely. l Driving: The traffic laws that allow you to get to school safely have been created and enforced by local government and police departments. Potholes in the road have been filled by a company hired by the government. l Listening to the radio: You can hear music clearly because a government agency assigns a separate frequency to each competing station. l Going to School: National, state, and local government regulate and fund schools so we have an educated workforce. l Going to Work: Government agencies assure that your workplace is safe and protect you from discrimination.

Government Intervention in Markets: l Regulation - government control of an industry l Control l prices, output, standards Deregulation - removal of government control l No rules, free market

Reasons for Regulation l Protects Firms: l Costs of production (economies of scale) l “Fair” profits l Protects Consumers: l Necessary l Safety l Quality products/services will be available

Deregulation l Purpose l Remove government regulations to increase competition, lower prices l Dilemma l Increase competition without social costs (ex: health and safety requirements)