Privatisation

    Cards (8)

    • State-owned (nationalised) enterprises tend to be strategic infrastructure sectors with high start-up costs; e.g. energy, transport, communications, etc.
    • Nationalised enterprises' revenue is either reinvested or used to support other government spending
    • Nationalised industries are, in effect, state monopolies
    • Free market economists argue that nationalised enterprises are inefficient as there is no competition, and therefore lack market discipline. This means there is no incentive to become more productive
    • Free market economists argue in favour of privatisation as they believe it will increase the quality of enterprise
    • Nationalised industries such as; British Gas, British Steel, and British Rail were privatised under the government of Thatcher, and most nationalised industries were privatised.
    • Privatisation of strategic infrastructure industries may be negative due to the high start-up costs, and therefore high barriers to entry. This means that most state monopolies have become private oligopolies.
      There is still a lack of market discipline and consumers have to face higher prices and poor-quality service
    • Many previously nationalised industries are now run by foreign firms
    See similar decks