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Deregulation - Essay Example

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Deregulation involves the reduction in the role that the government plays in business control and thus creating businesses and markets that are freer, in other words, removing set regulations. The argument is that deregulation creates competitiveness and improves productivity…
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Deregulation Deregulation Deregulation involves the reduction in the role that the government plays in business control and thus creating businesses and markets that are freer, in other words, removing set regulations. The argument is that deregulation creates competitiveness and improves productivity. Arguments against it state reasons such as environmental preservation, reduction or control over monopolies, as well as prize standardization. Transportation, energy, finance, and communication are areas that have faced deregulation over time in different states.
The federal civil aeronautics board (CAB) regulated all airline services for flights without the states (but not within) controlling the fares, travel times and even routes. They attempted to control prices by lowering the short distance travels and raising those of a long distance. They were also obligated to ensure that the airlines got fairly good returns. The period of 40 years within which air transport was regulated saw a steady growth in the industry, in terms of people travelling, employees and even returns.
However, the rigidity of the system was opposed by the consumers who were exploited as well as some airlines. The major reasons for deregulation were to offer room for competition and to increase the desirability of the system. After much deliberation and slowly, the deregulation campaign won by slowly and gradually stripping CAB of its powers until it was later dissolved. The whole campaign relied on competition to equalize prices, ensure effectiveness and offer efficiency. After some period of time, it was argued that the deregulation act was unconstitutional. The U.S court appealed that the employee rights were severed by the act and in a bid to ensure that there were no job losses due to deregulation, the employee protection program was instituted. It later was involved in making of guidelines to ensure that the same did not take place.
Reference
Wensveen, J. G. (2011). Air Transportation. A Management Perspective. Ashgate Publishing Limited Read More
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