Regulation and privatisation unit 3

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  • Created by: Lottie
  • Created on: 17-01-13 14:39
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Price capping
RPI- X (efficiency gains)
RPI+K(additional capital spending)
regulatory capture
Time period too short?
setting K/X is difficult
set too high= insufficient funds to complete
Too low=excessive profits
Rates of return
Make profit based on capital then rest taxed on 100%
No incentive to make efficiency gains past a certain
Overstate capital to increase profits
Penalised for success
Performance targets
Based on increase in quality/ decrease in complaints
Fines if fail to meet
Costly to monitor
Productivity/effiency should increase
Impact on R&D decreases?
How big are the fines?

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Sale of state owned shares of firms
Contracting out
Selling of individual state assets
Improved efficiency due to the profit motive?
More range of goods from R&D in private sector
Lowe prices due to competition
Enable firms to compete globally
One off payment for gov
Public private partnerships
Contracting out
Local authority contract out to private firm
Competitive tendering
Private firms bids for contract of provision of public
Private public partnership
Funding for public projects through private funding
Cost of borrowing…read more

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Office of fair trading standards: investigate proposed
mergers, abusers of market power and contestability
Competition commission: investigate mergers in regards
to competition rather than consumer welfare, long time
for investigations so prefer to turn a blind eye…read more



A 3 page summary of how the government intervenes in the market. Suitable for last minute revision.

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