sales of government owned assets to the private sector
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What is Nationalisation?
State ownership and control of firms
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What are the positives of Privatisation?
Promoting efficiency- profit motive creates incentives to cut costs increasing dynamic efficiency. if employees have share they are likely to be more productive
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Another positive of Privatisation?
Raises revenue for government= assets sold to private sector provides short term source of revenue. Promotes competition. reduces trade union powers
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Disadvantages of Privatisation?
Often gov sells off assets too low a price. Worse allocation of resources- profit max monopolies will raise price and restrict output. state run organisation could produce at MC production. Externalities ignored.
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What is a PPPs?
Public-private partnerships- variety of partnerships between public and private sectors contracting out.
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What is PFI?
Private finance initiative- gov does not have to get fully involved in planning and running of projects but can decide on required service and leave private sector to bid to do rest.Greater expertise.
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