Government Regulation and Deregulation of Business

Flashcards on government regulation of business.

Background Regulations

Rules imposed by the government on business to achieve some desired goal.

Economic Regulation

Government can control the behavior of business in the marketplace.

FCC

Federal Communications Commission

CAB

Civil Aeronautics Board

Social Regulation

Government tries to correct the ill side effects of capitalism.

EPA

Environmental Protection Agency

OSHA

Occupational Safety and Health Administration

Ill Side Effects of Capitalism

Growth of abusive monopolies, atrocious working conditions, unsafe products and business bribery.

Antitrust Policy

Regulate or break up abusive monopolies and restore competition.

Sherman Antitrust Act, 1890

Addressed monopolies.

Clayton Antitrust Act, 1914

Addressed monopolies.

Federal Trade Commission Act, 1914

Addressed monopolies.

FTC and Antitrust Division

Intentionally understaffed by Reagan and Bush to discourage excessive antitrust activity.

TARP

Temporary Assets Relief Program- Under Obama, the federal government purchased 'troubled assets' from financial institutions.

Arguments for Regulation

Protects consumers from unsafe products, protects workers from unsafe conditions, levels the playing field.

Arguments against Regulation

Market forces will compel businesses to work for the benefit of consumers.

Deregulation

cutting back on government regulation

Airline Industry Before 1978

Industry was regulated- CAB controlled rates and fares.

Airline Deregulation - 1978 Legislation

Led to phasing out the CAB and allowed airlines to set rates and fares.

Telecommunications Act of 1996

Increased competition among phone, cable, and other communications companies.

Positives of Deregulation

Restores natural market forces, encourages competition and innovation, lowers costs.

Negatives of Deregulation

States continue to regulate business leading to confusion with 50 different sets of regulations.