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Summary Privatisation
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this document is a summary of the chapter 12 privatization lesson. This is perfect if you are struggling t identify the advantages and disadvantages to consumers, workers, government and the privatized firm. The document includes all the crucial information related to the examination questions and ...

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  • Chapter 12
  • July 13, 2023
  • 2
  • 2022/2023
  • Summary

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CHAPTER 12 PRIVATISATION
Definition: Privatisation is the act of selling public sector owned resources to the private sector. ( 2
marks)

Reasons for privatisation

1. To generate income.
2. To reduce political interference.
3. To reduce inefficiency in the public sector.


Benefits consumers

1. Private sector businesses always try to minimise their costs .’. might lead them to charge lower
prices from customers.
2. Improved quality and innovation as they have may invest in R&D inoder to cut through higher
competition while trying to make their product different from other competitors.
3. Might result in more choices as there’s more competition in the market.

Adverse effects to consumers

1. Decline in prices might be associated with declining in the quality of the goods or service
provided.
2. Private sector businesses always aim to maximise their profits .’. they might charge higher prices
from customers thus exploiting them.
3. They may not invest in R&D (research and development) as they are trying to minimise their
costs and maximise their profits resulting in fewer / no innovations.

Benefits to workers

1. Workers pay might be increased as private sector retains the most efficient workers.
2. Private sector might focus more on the working conditions as they have enough profits to fund
such expenses.
3. Private sector may use the most latest technology .’. workers will be more flexible as they have
more experience.

Disadvantages to workers

1. Redundant inefficient workers as private sector’s main objective is cost minimisation. (reduced
job security)
2. Might exploit the workers by paying low salaries and wages and paying less by making them
work longer hours.
3. Private sector won’t invest in buying the latest technology if cost minimisation is their priority.




HIRUNI FERNANDO 😊

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