Privatisation Vs Nationalisation

Question 1

Privatisation definition

Answer 1

The sale of government equity in nationalised industries.

Question 2

Nationalisation definition

Answer 2

When private companies/industries are taken under state control.

Question 3

Advantages of privatisation

Answer 3

• Increased competition
• Lower prices
• Less X inefficiency
• Increased gov revenue
• Increased investment due to more certainty (not being run by a gov which changes every 5 years)
• Workers more motivated - more bonuses

Question 4

Disadvantages of privatisation

Answer 4

• Externalities
• Inequality
• Natural monopoly better under state control- won’t abuse monopoly power

Question 5

Additional advantage of nationalisation

Answer 5

• Minimum quality

Question 6

Additional disadvantage of nationalisation

Answer 6

• Moral hazard