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Deregulation: Pros and Cons Explained

The document discusses deregulation, which is removing government control from a market. It provides examples of deregulation in the financial industry leading to the 2008 crisis, but also discusses how airline deregulation decreased ticket prices. The document outlines advantages like economic growth and lower prices, and disadvantages like lower standards and potential market failures.

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Lakpa Nuru
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28 views7 pages

Deregulation: Pros and Cons Explained

The document discusses deregulation, which is removing government control from a market. It provides examples of deregulation in the financial industry leading to the 2008 crisis, but also discusses how airline deregulation decreased ticket prices. The document outlines advantages like economic growth and lower prices, and disadvantages like lower standards and potential market failures.

Uploaded by

Lakpa Nuru
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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DEREGULATION

Kabita poudel
WHAT IS DEREGULATION?
Deregulation is removing legislation and laws imposed by the government
on a particular market.

In simple words, it is the situation where government is not controlling


certain market in any way possible.
Effect of Deregulation
Deregulation in the financial industry was the primary cause of the 2008 financial
crash.
1. Deregulation allowed speculation on derivatives backed by cheap, wantonly-issued
mortgages, available to even those with questionable creditworthiness.
2. Deregulation allowed for the creation and trading of complex financial instruments,
such as mortgage-backed securities and credit default swaps, which were difficult
to value and contributed to the crisis.
3. Deregulation reduced government oversight of the financial industry, allowing
financial institutions to operate with less scrutiny and accountability.
Is deregulation always bad?
Lets see an example to prove that deregulation is not always bad.
Airline deregulation in the US.
In 1978, the US government deregulated the airline industry allowing for an
increase in competition. This resulted in a 33% decrease in the prices of
tickets and helped lower costs airlines and smaller airports.
ADVANTAGES AND DISADVANTAGES

ADVANTAGES

• Economic growth
• Increased customer choice
• More freedom
• Lower prices
DISADVANTAGES
• Lower standards
• Monopoly power
• Market failure
THANKYOU

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