What are the advantages and disadvantages of public ownership?

Natural monopoly, focus on welfare not profit, profits can be reinvested

advantages of public ownership

helps avoid duplication and ensures access by everyone => some industries are natural monopolies

How is public ownership good for natural monopolies?

natural monopolies

in some industries it is wasteful to have multiple companies building separate systems

Network Rail owns and maintains the railway tracks in the UK to benefit all users

Application for natural monopolies

however=>no competition=>public orgs may lack pressure to improve production=>inefficiency=>depends if properly managed

evaluation of natural monopolies

gov. run services forced to meet people’s needs=>instead of making profit=>socially beneficial decisions=>everyone receives care regardless of circumstance=>less inequality

How is public ownership good for focus on welfare not profit?

however=>no profit=>disincentivised to improve/innovate=>slow progress and less efficiency over time

evaluation of focus on welfare, not profit

publicly owned orgs make profit=>can be redirected to other areas=>retains money within public sector=>less need for taxes

How is public ownership good for reinvestment of profits?

reduced efficiency, risk of political interferences, cost of taxpayer

disadvantages of public ownership

minimal competition=>less pressure for efficiency=>slower decision making and wasteful spending

How does public ownership lead to reduced efficiency?

however=>with good leadership and high accountability=>some public bodies can still deliver high quality services and use public funds responsibly

evaluation with reduced efficiency

gov may run public businesses to suit political interests

How does public ownership lead to risk of political interference?

low prices prior to elections despite causing long term financial issues

application for risk of political interference

however=>independent regulators and professional managers can help reduce political influence and run public services more like businesses

evaluation with risk of political interference

requires lots of money=>especially if large or unprofitable=>if service fails=>burden falls on taxpayers

How does public ownership lead to cost of taxpayer?

however=>may be more beneficial than private ownership in long run=> with more investment=>better quality public services

evaluation of cost of taxpayer