Privatisation

Question 1

Define privatisation?

Answer 1

Privatisation involves selling state-owned assets to the private sector

Question 2

How does privatisation potentially improve economic efficiency?

Answer 2

profit incentive-cut costs and be more efficient-x-efficiency and productive efficiency

Question 3

Policies alongside privatisation

Answer 3

Deregulation-increase in competitiveness-lower prices-more output-increasing societal welfare

Question 4

Effects of privatisation on a natural monopoly

Answer 4

High prices and inefficiencies-“better public than private monopoly”

Question 5

Evaluation of privatisation

Answer 5

Industry (public interest?)
Contestability
THE REGULATOR

Question 6

Problem with privatisation (monopoly)

Answer 6

Lead to higher prices-less alloc- efficiency-regressive impacts-government failure