Explain any 5 arguments in favour of privatization
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Arguments for privatisation
Privatisation involves selling state-owned assets to the private sector. For example, in the 1980s, the UK government sold many state-owned industries, such as BP, BT and British Gas on the stock market. The main arguments for privatisation includes:
Efficiency gains. When firms are privately owned, there is a greater profit incentive to increase efficiency. In the private sector, managers are accountable to shareholders, who will want a good return on their investment. For example, a nationalised industry may be reluctant to get rid of surplus workers due to political reasons (bad publicity). But, the private firm may be more willing to cut costs and improve efficiency.No political interference. In the private sector, there is a pre-commitment by the government not to interfere for political reasons. A private firm isn’t held back by politics. A private firm may be more able to raise finance on the stock market to invest. Privatisation also reduces the scope for corruption.Increased share ownership. UK privatisation programme saw a rise in share ownership.Raise revenue for the government. Privatisation is a way to sell state-owned assets and generate a windfall for the government. In theory, this could be used to finance long-term investment. Though as a drawback, the government will lose annual profit dividendsIncreased competition. Often privatisation was accompanied by de-regulation, where the government also tried to increase competition. Increased competition from deregulation will bring more benefits for the consumer, such as:Increased competition leads to lower pricesIncreased competition encourages the development of new productsIncreased competitionencourages better quality service
Privatisation involves selling state-owned assets to the private sector. For example, in the 1980s, the UK government sold many state-owned industries, such as BP, BT and British Gas on the stock market. The main arguments for privatisation includes:
Efficiency gains. When firms are privately owned, there is a greater profit incentive to increase efficiency. In the private sector, managers are accountable to shareholders, who will want a good return on their investment. For example, a nationalised industry may be reluctant to get rid of surplus workers due to political reasons (bad publicity). But, the private firm may be more willing to cut costs and improve efficiency.No political interference. In the private sector, there is a pre-commitment by the government not to interfere for political reasons. A private firm isn’t held back by politics. A private firm may be more able to raise finance on the stock market to invest. Privatisation also reduces the scope for corruption.Increased share ownership. UK privatisation programme saw a rise in share ownership.Raise revenue for the government. Privatisation is a way to sell state-owned assets and generate a windfall for the government. In theory, this could be used to finance long-term investment. Though as a drawback, the government will lose annual profit dividendsIncreased competition. Often privatisation was accompanied by de-regulation, where the government also tried to increase competition. Increased competition from deregulation will bring more benefits for the consumer, such as:Increased competition leads to lower pricesIncreased competition encourages the development of new productsIncreased competitionencourages better quality service
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Some arguments in favour of privatization.
Explanation:
- Privatization is the movement of things form the public to the private sector and may be also called the franchising or outsourcing, as private entities are tasked with the implementation of government programs.
- The profit motivates acts as an incentive for the owners and the managers. These firms may avoid external costs and the external benefits, have an incentive to the introduction of new technology and raise labour productivity.
- The private firms employ the managers with the best skills as a private monopoly may charge higher prices.
- Efficiency gains Increased competition leads to lower prices
- Have no political disturbances or barriers to trade, Increased share ownership.
- Increased competition Privatisation is most successful with the potential for competition.
Learn more about the arguments in favour of privatization.
- brainly.in/question/3144128 answered by Kanak92.
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