privatisation

privatisation is the process by which a former publicly owned organisation or activity is sold off to the private sector,generally, it including an outright sale to another company, a management and employee buyout, or the public sale of shares in a new company.

what is the benefits of privatisation?

• privatisation will stimulate the current owner concentrate more on maximise the profit. Therefore they will set some SMART strategies such as increase the consumer services and quality of it which will help to improve the allocative efficiency.

• Privatisation provides a series of supply side-benefits for consumers due to an activity being exposed to the free market.

• privatisation will reduce the government intervention. Normally a nationalised company will effect by the current economy situation as well as some political factors. For example if they meet recession the government will ask them to reduce the price. I think this because government is concentrate more on the social side. Therefore if the company have privatisation, these obstacles will be avoid.
  

The disadvantages of privatisation

• more risks. For example less government subsidies.
• if the company is controlled by the government, the taxpayers will pay if the will have a loss so there s no insensitive to minimise costs
• privatisation nay not necessary encourage the competitiveness, because the national monopoly may become local monopoly.
• cross subsidisation may not apply here.