What happens to production possibilities curve when government deregulates industries?

Question

What happens to production possibilities curve when government deregulates industries?

Answer 1

Should extend outwards as the restrictions the government were putting on industries have been removed.

Answer 2

Depends on nature of why gov regulated industries.

If it regulated it to protect from profit-maximizing monopolization thus reduction of total surplus - then deregulation will allow market monopolization and PPC/PPF will tend to move inward shrinking economy.

If gov regulated industry to achieve other than economic goals (less pollution, social security, etc.) then result will depend on type of consequent development, if markets will tend to be more competitive then potentially PPC/PPF might expand in some cases (though depends on dis/economies of scale effect, for case with foreign trade - specialization level, etc.)

Initially governments could prevent PPC from market failures inefficiencies, or opposite - it could do intervention which lead to market inefficiencies.

So all in all net effect could be different depending on development paths and trends/motives - thus to provide better answer more information should be supplied for model.