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