Economists usually prefer private ownership to public ownership of natural monopolies because private owners have an incentive to:

Question

Quizplus · Accepted Answer

Private owners have an incentive to minimize cost as long as they reap part of the benefit in the form of higher profit. This is because a private owner's profit is directly linked to the amount of cost they incur in producing goods or services. Hence, they will have an incentive to keep their costs low to increase their profits, which is not the case for public ownership where there is no direct link between cost and profit.

Economists Usually Prefer Private Ownership to Public Ownership of Natural