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Give me the merits and demerits of privatization?


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Answered 2007-09-20 06:56:28

OK, very briefly, the merits or advantages of taking a company from state-owned to a private company are that it will force the company to operate efficiently without state subsidies. If it does not do so it will go out of business. It will be forced to compete with other companies and will have to reduce costs.

The big demerit or disadvantage is that the company will no longer operate in the public interest. While a state-owned company primarily serves the citizens of the stae, the primary goal of a privately operated company is to make profit. It may make these profits at the expense of its customers without serving them properly. For example, it may choose the market which is most profitable to operate in and leave lsss wealthy customers without a service.

You need to illustrate your answer with examples.

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