Govt Intervention - Promoting Competition and Contestability:Deregulation and Privatisation

Question 1

Definition deregulation

Answer 1

Deregulation involves reducing or removing government imposed restrictions and regulations on businesses who wish to enter a market

Question 2

Advantages and disadvantages of deregulation

Answer 2

Advantages:
-increased consumer choice
-increased competition- lower prices
-increased innovation

Disadvantages:
-Reduction in safety and quality of products
-reduced consumer protection
-large companies may exploit deregulation to dominate the market

Question 3

Definition privatisation

Answer 3

The transfer of ownership of a publicly-owned enterprise to the private sector

Question 4

What 3 publicly owned businesses were privatised in the 1980s

Answer 4

British Telecommunications
British Gas
British Airways

Question 5

Arguments for and against privatisation

Answer 5

For:
-reduction in X-inefficiency
-increase in productive and dynamic efficiency
-raise in govt revenue
-greater access to capital
-improved service quality

Against:
-profit motive
-reduction in allocative efficiency
-Loss of natural monopoly
-Loss of accountability