14. privatisation

Question 1

define privatisation

Answer 1

the transfer of ownership of state owned assets from the public sector to the private sector

Question 2

in what form can privatisation come in

Answer 2

a direct sale
outsourcing public activities to the private sector
deregulating markets from government envolvement

Question 3

examples of privatised firms

Answer 3

british airways
British Gas
UK buses
Royal Mail
british rail

Question 4

arguments for privatisation

Answer 4

increased competition
increased efficiency
lowers government costs
revenue for selling firm

Question 5

arguments against privatisation

Answer 5

private firms focus on profit
worse quality
firms may become too powerful and become a monopoly, decreasing competition

Question 6

define renationalisation

Answer 6

the transer of privately owned assets to the public sector, which were previously owned by the government

Question 7

arguments for renationalisation

Answer 7

work in the publics interest, rather than for profit

government is more likely to take into account externalities than the private sector

high chances of survival - tax’s are constant

can create natural monopoly (economies of scale)

Question 8

arguments against renationalisation

Answer 8

lack of efficiency leading to higher costs for government

decisions may be subject to political interest

Question 9

is privatisation good or bad (evaluation)

Answer 9

depends on size of firm and the amount of competition they have
depends on barriers to entry for new firms/contestibility
depends on the sector of the firm (eg. education should hve less profit motive)