nationalisation Flashcards
what is antionalisation
transsfer of an industry from private ownership to state conttrol
what happens in nationalisation
gov buys up assets from priv seector and runs the service/indusyr themselvees
what ar eour reasons 4
greater EOS
more focus on service provision
less likely to be mkt failrues arising from externalities
public sector can be a great vehicle for macroeconimc control
what are our 5 negatives
risk of DEOS
Lack of incentive for the state to reduce costs because there is less competition - higher costs
lack of snp due to lack of incentives
highyl expensive + burden on taxpayers
greater risk of moral hazrad
what are our eval points
funding v delivery
pps may be better
role of regulation
level of competition in private sector
size and objective of priv sector firms
explai greater eos benfit
if got state run monopoly dominating hte industry
the industry has greater potential for EOS
this will lead to productive efficieny gains
lower AC and potentially lower prices for ocnsumers = increase consumer surplsu
explain more focus on serice provision
gov look to max social welfare and fulfill needs and wants of society
therefore if state run company - whatever is desired is likely to be prodoided
this means we have allocative efficiny benefits and crucially at a lower price whihc maximiese CS
explain less liekly to be mkt fialures arising from externalities
as gov intends to max social welfare
they consider full social costs and full social benefits hwen it comes to producing - not just PB and PC as priv sector would
so output levels will be socially optimal where society get exact Q they want
this minimises over and under production issues we may have had in private sector
therfore allocative efficeiny gains
explain public sector control can be great vehicle for macroeconomic control
if e allwo for nationalisation
gov can manipulate wages to keep inflation under contorl
if inflation increases public sector cna enact pa cuts - bring inflaitno towards target
can also control employment levels
e.g if we are in a recession - public sector can look to employ more workers to keep unemploment rate low at point of recession
explain risk of deos
if state run omonply
company could be so huge therfore DEOS occur
coord , comm , motivation
increase avg costs , lse productive efficeny gains
increase £ in end 4 consumers
explain lack of incentive of state run monply to recue costs + risk of compancey and wastefuk prod
we get higher cop than whats shoudl be
+ x ineeff fro complacney
higher cop as lcoak profit motive and therfore incentive to reduce costs
end result = inefficney , productive inefficien
anf higer £ for cons at the end
explain lack of snp
due to lack of profit motive compared to priv industries
dynamic inefficny is rsult - no tech gains , rand d , innovaiton when SNP reinvested
priv firms more liekly to be dyno eff
not good for consuemr in LR as dont see increase in quality + get upgraded goods
explain hihgly expensive burden on tax payer
runnning of state comp is very ecpesnive e.g wafes- + cos of buying assets from priv sector in teh first place
taxpayer shoulders the burden
in a period of austerity - when national debt is already high and want to be lower - argue can gov afford it
if we they do decide bring in opp cit argyment - could have been better benfits by using the tax payers £ in other areas such as education
better ror by using tax payers money in diff areas
explain higher prices due to low copm
lead to higher prices and lower q
in essence we see monopoly otucomes we tryna prevent tkaing place as not ocpm drive to maintain eff w in bs
end result = aloocative ineff
greater moral hazard
indi that take risk dont bear cost of risk
costs bore by 3 rd party
politicains make risky descison s- they amy be risk happy - if it goes wrong and fails dramatically - taxpayer bears cost/ state run comp going into bankrupcy as a reuls to fe excessive risk being taken
