Privatisation arguments

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  • Created by: Jade
  • Created on: 17-11-12 20:26
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  • Privatisation
    • Transport is an essential service
    • Private sector - more efficient - more likely to operate where P=MC
    • The natural monopoly argument
    • Privatisation  would allow businesses to focus more on long-term planning.
    • Large external benefits ignored by private firms
    • Privatisation - new source of investment funding for transport
    • Arguments against privatisation
      • Net welfare effect is uncertain
      • Privatised companies have conflicting stakeholder objectives
      • Long term - sold off 'family silver'
    • Arguments for Privatisation
      • Losses turn into profits
      • Contestable market argument
    • The lack of empirical evidence to support privatisation
    • Private sector firms now have the profit that encourages technical efficiency
    • Private monopolies will replace public monopolies
    • Process by which a state-owned organisation or activity is sold off to the private sector

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