T8 _ publcie ownership Flashcards
What is a command economy
Government owned
Gov regulation on MF
What si a market economy
Owned by private sector
freedom to start business
supply and demand choose price
Benefits of privatisation
comp and efficency
lack of political interference
helps gov budget
long term growth
Negatievs of privatisation
Cause monopoly
hard to regulate monoply
loss of consumer welfare
high costs
Evalutation of privatisation
Type of good
Depends on quality of regualtion
Type of industry and market created
Incentives for nat firms?
What is regualtion
Set of rules imposed by the governemnt to determien behaviours of rims
Why may gov use regualtion
Externalities
Monopoly power
Consumer welfare
Competition
Info
Labour markets
Disadvantages of regaltuom
cost on firms
inc bte
dec comp
affects descion making
What is deregualtin
Removal of legislation, removign barreirs to entry
Adv of dergeulation
Inc comp
Greater efficency
Greater consumer chocies
Inc contestbability
Dis adv of de reg
Difficult to create comp in a a market where there is monopoly power
Duplication of sercies
Firms may cherry pick most profitabe serveices
Poorer provision of public goods
No guarnettee firms will keep standards high
Whta is regaulatory capture
Where govbecomes sypatheti to buesiness they regualte
How does regualtory capture occur
Regualtors become friendly with firms
Lack of regualtors workers
Firms pushing for reg to damage comp
Info failiure
Politcal interference
who owns privatsied firms
private sector
what is the inceintive in privatised firms
profit
will natioanlised firms ignore social cost and ebenif
no, but privatised will
will privatised firms put profit above social benefit
yes, nationalised wont
will natioanlised firms be as efficient as rpiatised firms
no, lack of comp, natural monoply, no need to be
under whic wndership will a firm be lead be experts
privatisied
what do nationalised firms set price on
social factors, costs and beenfits
what do priavtised firms set prices based on
maximsing profit
positive of nationalisation
greater eco of scale
inc consumer welfare
less likely market failiure
better macro economic control
arguments against natioanlsiation
lack of incentives
inneficincy
damages budget deficit
political interference and moral hazard
eval of natioanlisation
Public private ownership?
Better regulation instead
Pros of comp outweigh pros of nat
size and objectives of firms to be natioanlised
what si mroal hazard
indivudals bearingtaking risk as tehy knwo a third party will pay teh cost
example of moral hazard in nationalisation
gov fuckings hit up knwoing tax payer will bear teh cost
will regualtors be innefcient
yes if -
decreases comp
regualtory capture
not properly enforced
adv of regualtion
curb externalities
protect consumers
less discrimination
fairer
leads to innovation
