4.1.8.8 Public ownership, privatisation, regulation and deregulation

regulation

rules made by the government to control how businesses and markets work

to ensure their fair for everyone

Why are markets regulated?

reduces monopoly power via competition policy, lower prices via price controls

how does regulation stop market failure

market failure

when markets do not work properly by their own

protect consumers, stop unfair competition, keep people and environment safe, ensure honesty from businesses, prevent monopolies

5 reasons for regulation

deregulation

removing/reducing government rules in a market

increases competition leading to lower prices, allows greater business autonomy

why do governments deregulate markets

removes rules that stop new firms from joining the market => price competition => lower prices

How does deregulation lead to lower prices?

less protection for consumers/environment, regulatory capture

however, deregulation has some downsides

regulatory capture

when a government regulator starts helping the businesses it is supposed to control, instead of protecting the public due to over friendliness with the business or because the gov. relies on them for info, as a result rules benefit companies over consumers

in the UK deregulation of the airline industry led to more airlines emerging, creating lower prices

application for deregulation

only lowers prices if enough new firms join, lower quality, some industries require strong rules for safety and reliability

disadvantages for deregulation

ease of new firms to join and survive, other protections, industry type

evaluation for deregulation, what does it depend on?

public ownership

when businesses or assets are owned and controlled by the government on behalf of the people

National Health Service(NHS)

application for public ownership

public sector

includes organisations and services owned and run by the government for the benefit of the public

nationalisation

when the government takes ownership of a private sector business and brings it into the public sector

coal, electricity, railways, iron and steel

Application for nationalisation, what industries were nationalised by labour(1945-50)?

Private sector

includes businesses and organisations owned by individuals or companies aiming to make a profit

profit but for public benefit

Nationalisation means businesses no longer run for ____ but for ______ ______