Privatization

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  • Created by: Adrian
  • Created on: 07-05-13 15:29

Privitization

Advantages

  • Increased competition in the market
  • Workers will feel more motivated, so products will highly often be of a lower price and a high quality
  • Consumers can choose from a wide range of goods
  • Government can gain more revenue form selling the firms to the public. Hence, they can lower taxes, and the government can become more efficient

Disadvantages

  • Lack of production for public services
  • Negative externalities
  • Some firms may be only interested in making big profits, so they can charge their products at high prices and of lower quality.
  • Lack of help from government may result in firing and unemployment

Evaluation

There are many advantages not to mention disadvantages. Though customers can choose from a wide  range of goods, privatization can cause the lack of production for public services, and this cause more negative externalities. Also, because of the lack of help from the government, unemployment may become an arising issue. Some firms can also only have a profit motive, and hence they can take advantage by raising their prices and lowering the quality of their products. 

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