Legal Definitions - deregulation

Definition: Deregulation is the process of reducing or eliminating government control over businesses, especially to allow for free markets and competition. This can lead to a decrease in governmental oversight and intervention in the business of financial institutions, which can result in relaxed regulation of financial contracts and increased competition for depositors and borrowers.

Example: In the 1980s, the United States government deregulated the airline industry, which allowed for more competition and lower prices for consumers. Prior to deregulation, the government controlled which airlines could operate on certain routes and set prices for tickets. After deregulation, airlines were free to set their own prices and routes, which led to increased competition and lower prices for consumers.

Explanation: This example illustrates how deregulation can lead to increased competition and lower prices for consumers. By removing government control over the airline industry, airlines were able to compete more freely, which led to lower prices for consumers. This is a common outcome of deregulation, as it allows businesses to operate more freely and compete more effectively.