What are the advantages and disadvantages of nationalization and privatization?

Answer 1

Arguments for Nationalisation

1. They benefit from economies of scale (Bigger is better) which means that the prices to consumers is relatively lower than if we had a number of small firms.
2. A monopoly owned, run and controlled by the government will stop the consumers being exploited.
3. The government can manage the economy by controlling the important industries.
4. The government can invest money and make their service more efficient.
5. Companies owned and run by the people for the people take social costs (pollution etc.) into account and the profit goes back to the people.
6. The gap between the wealthy and poor will be reduced by more equitable distribution of income.

Arguments for Privatisation

1. Nationalised industries are inefficient due to a lack of competition. Competition means efficiency improves.
2. Competition leads to more choice for consumers.
3. " " " better quality.
4. Firms produce what people want and they innovate and use new technology.