Copyright

Types of Regulation, Privatization, & Deregulation

Types of Regulation, Privatization, & Deregulation
Coming up next: Business' Influence on Advisory Panels & Committees

You're on a roll. Keep up the good work!

Take Quiz Watch Next Lesson
 Replay
Your next lesson will play in 10 seconds
  • 0:31 Types of Regulation
  • 1:25 Privatization
  • 2:25 Deregulation
  • 3:13 Cross Subsidization
  • 3:53 Cost-of-Service
Save Save Save

Want to watch this again later?

Log in or sign up to add this lesson to a Custom Course.

Log in or Sign up

Timeline
Autoplay
Autoplay
Speed

Recommended Lessons and Courses for You

Lesson Transcript
Instructor: Jennifer Lombardo
Government can monitor, control and manage business through different types of regulation. In this lesson, you will learn about the two specific categories of regulation and how privatization and deregulation impacts business.

Regulation

Have you ever wondered why the postal service is managed by the U.S. government? Or why the airplane industry is a private enterprise? The government has tremendous power and influence over business. The central way the government monitors business is through regulation, or controlling and managing an industry through laws. In this lesson, you will learn about the types of regulation, privatization and deregulation through various real-life examples.

Types of Regulation

The U.S. government is responsible for different types of regulation. The two major types of regulation are economic and social regulation. Economic regulation sets prices or conditions for firms to enter a specific industry. Examples of regulatory agencies that provide these types of conditions are the Federal Communication Commission, or FCC. Social regulation deals with the protection of individuals through an agency, such as the Environmental Protection Agency (EPA) or Consumer Product Safety Commission (CPSC).

In the last few decades, there has been a decrease in economic regulation and an increase in social regulation. Regulation is determined upon risk or who should be responsible for it. For example, the CPSC is responsible for toy safety for children.

Privatization

Privatization is when government lets businesses take ownership of a public function. This can occur through a government contract where a private company will take ownership of a product or service.

A big concern about privatizing a function is that it removes the ability of the public to provide feedback or concern. Some examples of functions that were privatized are health care, the Internet and water.

The reasons for privatization are usually that the government is not able to provide the services competitively, and they are less efficient than the private sector. Anti-privatization proponents feel that certain areas, such as the postal services and airlines, are not able to be run properly by the private sector due to cost issues.

Deregulation

Deregulation is when there is a decrease of regulation in an industry. A prime example of deregulation is the Airline Deregulation Act of 1978. The Act allowed many new airlines to enter the market with plentiful routes. Initially, prices decreased and options increased with competition flourishing. There is not final determination if deregulation of airlines was the best solution. Currently, airlines are merging due to increasing fuel costs. Consumers are finding crowded planes and delays. Deregulation does cause the elimination of cross subsidization and cost of service regulation. Let's take a real-world look at both of these terms.

To unlock this lesson you must be a Study.com Member.
Create your account

Register to view this lesson

Are you a student or a teacher?

Unlock Your Education

See for yourself why 30 million people use Study.com

Become a Study.com member and start learning now.
Become a Member  Back
What teachers are saying about Study.com
Try it risk-free for 30 days

Earning College Credit

Did you know… We have over 200 college courses that prepare you to earn credit by exam that is accepted by over 1,500 colleges and universities. You can test out of the first two years of college and save thousands off your degree. Anyone can earn credit-by-exam regardless of age or education level.

To learn more, visit our Earning Credit Page

Transferring credit to the school of your choice

Not sure what college you want to attend yet? Study.com has thousands of articles about every imaginable degree, area of study and career path that can help you find the school that's right for you.

Create an account to start this course today
Try it risk-free for 30 days!
Create an account
Support