to argue with the board, provided most of the information on which the board made decisions, and offered

well-paid jobs to at least some of the people leaving the board. In this situation, it is easy for regulators to

poorly represent consumers. The result of regulatory capture is that government price regulation can often

become a way for existing competitors to work together to reduce output, keep prices high, and limit

competition.

The Effects of Deregulation

Deregulation, both of airlines and of other industries, has its negatives. The greater pressure of competition led

to entry and exit. When firms went bankrupt or contracted substantially in size, they laid off workers who had

to find other jobs. Market competition is, after all, a full-contact sport.

A number of major accounting scandals involving prominent corporations such as Enron, Tyco International,

and WorldCom led to the Sarbanes-Oxley Act in 2002. The government designed Sarbanes-Oxley to increase
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