For And Against Privitisation

Question 1

What is privatisation

Answer 1

The selling of state owned assets to the private sector- often achieved through listing the new private company on the stock market e.g. BP and BT

Question 2

Potential benefits for privatisation

Answer 2

1. Improved efficiency
2. Lack of political interference
3. Short term view
4. Shareholders
5. Increased competition
6. Government will raise revenue from the sale

Question 3

Disadvantages of privatisation

Answer 3

1. Natural monopoly
2. Public interests
3. Government loses out on potential dividends
4. Problem of regulating private monopolies
5. Fragmentation of industries
6. Short terminals of firms