Small Business Glossary and Definitions

What is Deregulation?

Deregulation is reducing or eliminating government rules in an industry in an effort to make companies in that industry more competitive both domestically and globally.

Supporters argue that too many regulations drives up the cost of production specifically and of doing business in general, reducing investment and economic growth. Opponents argue deregulation can lead to pollution, unsafe working conditions, financial insecurity and the development of oligopolies, if not outright monopolies, in an industry.

Perhaps the most familiar example of deregulation is the 1978 Airline Deregulation Act signed by President Jimmy Carter. It removed federal government control over such aspects as market entry, routes and fares and led to the creation of “frequent-flyer” programs. The law is credited with decreasing fares and increasing the number of flights, miles flown and passengers.