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lower prices, increased efficiency, more innovation/consumer choice, reduced gov. spending
What are the advantages of privatisation?
competition forces companies to improve services and cut prices
How does privatisation lead to lower prices for consumers?
competition => firms are profit maximisers => pressure for better management => more efficiency
How does privatisation lead to increased efficiency?
1987, privatisation of British Airways led to it cutting losses and improving its international reputation
Application for increased efficiency
How does privatisation lead to more innovation?
competition => firms are ____ __________ => pressure to modernise to attract more ________ => improved production
profit maximisers, customers
1984, British Telecom invested on new technology after privatisation
Application for more innovation/consumer choice?
How does privatisation lead to reduced gov. spending?
gov. no longer needs to _____ on running org. => gov. saves money => gov. can focus on other areas => reduced _______ on gov. finances
spend, pressure
nationalised car company British Leyland required major gov. support in the 1970s prior to privatisation
Application for reduced gov. spending
job losses, loss of public control, risk of monopolies, profit over service
what are the disadvantages of privatisation?
How does privatisation lead to job losses?
increased efficiency => firms are _____ ________ => look to cut ____ by reducing labour => job losses
profit maximisers, costs
downsizing of British Coal in 1980s and 90s led to job losses, and socio-economic issue in Wales, Yorkshire, and Scotland
Application for job losses
How does privatisation lead to loss of public control?
industry no longer in hands of gov. => private firms(profit maximisers) may not ____ with public needs => essential services cater less to ______ ____ and are harder to _____
align, public needs, regulate
public concern over rising executive pay and lack of investment, despite high consumer bills, after privatisation of English and Welsh water industries
Application for loss of public control
How does privatisation lead to risk of monopolies?
______ ________ => after privatisation => a few large firms may ______ => depends on how well gov can ______ prices and quality
natural monopolies, dominate, regulate
natural monopolies
expensive to have multiple networks in one area for some industries
Concern over the “Big Six” that control UK energy market
application for risk of monopolies
How does privatisation lead to profit over service?
firms(profit maximisers) => get rid of __________ areas, even if they are socially important => uneven ______ to those less profitable to serve, i.e. elderly or people in rural areas
unprofitable, access
privatisation of the railways led to rural and less used routes to be reduced or made more expensive
application for profit over service