Arguments for privatisation
1.Improve incentives for production efficiency
- Makes managers accountable to shareholders.
e.g profit incentive will lead to getting rid of surplus labour, which would have been difficult in a nationalised industry for political reasons.
But sheltered monopolies will be sleepy no matter who owns them
so privatisation will be most successful where there is potential for competition.
2. Pre-commitment by government not to interfere for political reasons
3. Increased share ownership.
4. Increased competition from deregulation will bring benefits for the consumer
- Increased competition leads to lower prices
- Increased competition encourages the development of new products
- Increased competition encourages better quality service
Revision Notes and Essays on Privatisation
- Privatisation
- Arguments for Privatisation
- Disadvantages of Privatisation
- Nationalisation
- Privatisation in the UK
- Rail Privatisation
- Regulation of Privatised Industries
- Other Supply Side Policies


