Public ownership vs Privatisation

Question 1

Privatisation

Answer 1

The transfer of ownership of state assets to a privately owned entity

Question 2

3 benefits of privatisation

Answer 2

Improved efficiency
Less myopia and LR view (Royal Mail able to I)
Revenue from sale (Royal mail = £6.1bn in revenue)

Question 3

disadvantages of privatisation

Answer 3

Profit incentive may not serve public interest
Need for regulation and lost dividends creates cost
Fragmentation of industry (UK trains)

Question 4

Nationalisation

Answer 4

Transfer of a major branch of industry or commerce from private to state ownership or control

Question 5

3 advantages of nationalisation

Answer 5

Ensures economic survival of strategic firms
Benefits from government infrastructure
Allows for regulation (2008 banking crisis)

Question 6

3 disadvantages of nationalism

Answer 6

X-Inefficiency
Moral hazard
Limited scope for investment