Topics: Economics, Public company, Public sector Pages: 2 (311 words) Published: May 15, 2013
Privatisation is when a publicly owned company is sold to the private sector. A previously government owned company, offering free/cheap services to the public is now private, perhaps meaning raised prices as now their aim is to maximise profit rather than benefit the public. The Government is now able to earn short term cash, thought privatisation may affect them negatively in the long run. Advantages

Privatisation could mean lower prices for consumers. Sometimes the government is less efficient due to many sectors, duplication of effort and diseconomies of scale, and could actually be raising the price for citizens rather than benefiting them.

Privatisation can also mean a better and stronger economy due to higher efficiency. This means that the country could be richer, and the firms in that industry could expand and provide better service. With privatisation, the entire industry will be private, meaning there will be more firms competing in the industry. More competition means more differentiations and choices for the customer.

Because private firms strive for efficiency, excess workers will be fired. The government may have kept these jobs in order to provide job opportunities, but private firms will not allow for duplication of effort. This means privatisation may result in unemployment

It also may mean higher prices, unless the government was extremely inefficient, private sectors will probably mean higher prices, which is why some people think that privatisation without public consent is theft. For the public, it means private companies can now exploit their (probably monopoly) position by raising prices and earning more money, whereas the government would have kept the price down for the public.

It could also create problems for government later, which would have to be solved. The government would then be responsible for keeping people employed, lowering prices for the people, cleaning up the mess that private...
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