4.3 - Privatisation Flashcards
1
Q
What is privatisation?
A
Public - private sector transfer of a business, industry or service
2
Q
What are the benefits of privatisation?
A
Profit motive
Asset sale raises govt. revenue
Extra contestability
Competitiveness benefits
3
Q
Why is the profit motive a benefit of privatisation?
A
Drive to cut costs + improve productivity/efficiencies
4
Q
What are the potential drawbacks of privatisation?
A
Social objectives
State management more appropriate
Govt. loses out on dividends
Monopoly risk
Unemployment as efficiency rises
5
Q
Why may it be in the consumer interest for a firm/industry to be under public ownership?
A
Optimal allocation
Scope for natural state monopoly
E.g., Water, steel, railways
