Privatisation Flashcards
What are the aims of privatisation
To improve efficiency - dynamic efficiency as scope for profits, reduced x inefficiency as there’s more emphasis on cutting costs in pursuit of profit. Improved allocative efficiency if more competition arises.
Improve quality and range of services
Lower prices
What are the fiscal benefits of privatisation
Raises revenue for the government from the sale
Reduced cost on govt moving forward as they don’t have to provide the service
Chance of increased tax receipts in future
What is privatisation
The sale of state-owned assets to the private sector. It may also involve the contracting out of services to the private sector
How might privatisation fail to deliver on its aims
Lack of competition due to potential barriers to entry.
Does it result in a single private entity or many private firms competing.
How well is it regulated - regulatory capture, fiscal burden of enforcing regulation
Is it important that the industry be acting in the public interest?
Could harm the LR government budget if they sell a profitable industry
Privatisation of the rail industry led to increased number of rail disasters.
