Discuss two arguments in favour of privatizing crown corporations relating to competition and efficiency.

Question

Quizplus · Accepted Answer

The Answer is 1. Belief in the Power of Competition as a Control Mechanism
Privatization programs are typically guided by the view that the force of market competition is best suited to fostering efficiency and innovation in an industry. Specifically, the view is that privatization of a state-owned monopoly will open an industry to competition and, consequently, encourage innovation, growth, and efficiency. Moreover, where privatization opens an industry to foreign competition, this permits consumers to have access to goods or services developed in other parts of the world and will stimulate innovation among domestic firms operating in the industry.
2. Belief that Private Business Can Operate More Efficiently
Studies conducted in a variety of countries have found evidence that the private production of goods and services is typically more efficient than public production. Consequently, many observers feel that it is difficult for government-owned enterprises to reconcile the social goals of the enterprise with the economic-efficiency goals that must be of concern to any business. Removing the political element of an enterprise allows it to focus on efficiency and avoid potential conflicts of interest.

Discuss Two Arguments in Favour of Privatizing Crown Corporations Relating