Explain how deregulation could affect: Consumers of the good/service; Employees in the industry; Profitsofexisting firms

a) Consumers of the good/service
• Lower Prices.
• Increased availability of service.
• Increased efficiency.
• Loss of essential non-profit making services.
• Loss of quality in service
• Higher prices in future
• Increased competition / an increase in supply may cause prices to fall.
• With an increase in the number of suppliers, availability of the good/service may expand e.g. taxis in Kigali.
• With increased choice in suppliers the consumer may benefit from increased efficiency by firms.
• Non-profit making services may be discontinued by companies in an effort to reduce costs
• Quality of services may worsen to cut costs
• There may be higher prices in the future in order to survive the competition

(b) Employees in the industry
• Loss of employment in existing businesses.
• New job opportunities with new suppliers.
• Changed working conditions.
• With increased competition existing suppliers may suffer from a loss of business resulting in a loss of jobs.
• New suppliers may offer increased employment opportunities.
• The drive towards increased profits may mean that businesses may reduce the benefits to existing / new employees.

(c) Profits of existing firms
• No changes in efficiency or drive may lead to decreased profits
• Competition can lead to innovation and increased drive and hence to increased profits
• If existing businesses experience a loss of business, their market share falls resulting in a loss of profits.
• If the existing businesses are able to meet the new competition and expand their business activities the opposite of the above may occur. Business may experience economies of scale.

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