3.6 - Nationalisation Flashcards
What is nationalisation?
Sale of private assets into state ownership
What are the welfare arguments for nationalisation?
Externality control
Govt more socially efficient
Target/Priority groups
Why might nationalisation be in the consumer interest?
Quality regulations
Govt set output + prices
Pure focus on provision of G/S
Access to EoS
How does nationalisation promote stronger industrial relations?
Unions receive better treatment from govt than firms/monopolists
How does nationalisation benefit employees + suppliers?
Fair prices + wages
No profit maximisation
Why is nationalisation an ideal solution to a natural monopoly?
Only 1 firm achieves MES
Private NM is wasteful
Govt doesn’t exploit power
What are the efficiency arguments against nationalisation?
Rigid + bureaucratic
Lacks real competition
No rivalry incentives
How can nationalisation result in the Moral Hazard?
Protection from govt/taxpayer
Able to take spending/investment risk
Able to get bailed out
What are the arguments against nationalisation?
Inefficient
Moral Hazard
Potential diseconomies
