Privatization vs Nationalization

Question 1

Privatization

Answer 1

process of partially or completely selling stated owned and controlled business to private sector. Can be a direct sale or deregulation allowing for competition or contracting of services which will normally be done by public sector.

Question 2

Reasons for Privatization

Answer 2

• needed income for gov’t expenditure
• improve efficiency
• government can no longer afford to finance the company

Question 3

Disadvantages of Privatization

Answer 3

Causes creation of private monopiles
Income granted is a one off payment
citizens may loose control of an essential service
consumers can be exploited
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Question 4

Nationalization

Answer 4

Process of obtaining private industry from public sector

Question 5

Reasons for Nationalization

Answer 5

when a natural monopoly is occuring
government wants to control essential services/ services with positive externalities

Question 6

Arguments Against Nationalization

Answer 6

known for inefficiency
lack of accountability
lost of innovation
length of decision making