Question

What might some of the negatives of deregulation be?

Short answer

More alternatives for consumers can often make it difficult to make judgments, which is one of the drawbacks of deregulation.

Step-by-step solution

Definition

Deregulation is a method in which governments show their desire to leave the market economy to its own devices rather than suffocate it with a plethora of regulations, rules, and recommendations.

Explanation

Disadvantages of Deregulation:

• It will be difficult to create effective competition in an industry with significant barriers to entry that could be a natural monopoly. Deregulation may result in the formation of a monopolistic non-public corporation.
• Deregulation of the local bus market frequently resulted in duplication of services as well as traffic congestion. Local buses are an industry where multiple companies cause a wide range of issues. In addition, new private companies will try to cherry-pick the most profitable routes and times while avoiding the unproductive off-peak services.
• Train services were deregulated, resulting in the process of franchising, in which companies were awarded contracts for a specific essential measure. Within the bidding process, there is competition, but there is no guarantee that enterprises will deliver on their commitments. On several occasions in the UK railway business, the government had to take over a failing private company.