What Are the Principle Advantages and Disadvantages of the Public and Private Sectors Relative to Each Other? How Does the Government Seek to Combine the Best Features of Both in Providing Public Goods and Merit Goods

Topics: Goods, Public good, Private sector Pages: 3 (831 words) Published: April 24, 2011
The Public Sector sometimes referred to as the state sector is a part of the state that deals with the production, delivery and allocation of goods and services by and for the government or its citizens. This can be done on a national local or regional level. The Private sector is the polar opposite and is not controlled by the state. It is controlled by private individuals or organisations for private profit.

Public goods are those that are non-rivalrous and non-exclusive. Non-rivalry means that the consumption of the good by one individual does not reduce the availability of the good for consumption by others. Non-excludable being that no one can be effectively excluded from using the good. A private good on the other hand is a good that exhibits both excludability and rivalrous. Excludability being it is reasonably possible to prevent a class of consumers (e.g. those who have not paid for it) from consuming the good. Rivalrous being the consumptions by one consumer prevents simultaneous consumption by other consumers. Private goods satisfy an individual want while public goods satisfy a collective want of the society.

In the private sector, generally the main principle is to make as much money as possible. In competitive markets, firm’s objectives are to maximise profits. This can be seen as both a positive and a negative. Organisations will tend to be run very efficiently to compete with competitors, but on the flip side means that they could control producer power and don’t act in the favour to consumers.

The private sector is always looking to improve and be as innovative as possible, striving for excellence. This is done so that they can capitalise on their market share of the good or service that they are providing. This can be seen as both an advantage and disadvantage. It provides individuals within organisations no glass ceiling. The greater effort that they put in the higher the rewards they will reap. Therefore as the company grows...
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