A2 Economics

Aim:  To understand privatisation. Objectives:  Define privatisation.  Explain the benefits and drawbacks of privatisation.  Analyse the effects of privatisation.  Evaluate the effects of privatisation.

 List 4 state owned firms/organisations.  List 4 privately owned firms/organisations.  What are the key economic differences between state run and privately run firms?

 Sales of governments owned assets to the private sector.  Some governments argue that state monopolies are inefficient and resistant to change.  Belief by monopoly that they will always be bailed out by government.  Can also be in the form of deregulation or licensing and franchising.

 What effects did privatising the financial markets have?  At what stage in the business cycle was the UK economy when Thatcher began privatising firms?  Do you feel are there any similarities in the UK economy in the 1980s and the UK economy over the last decade?  Why do you feel state firms were privatised?  In groups decide on the advantages and disadvantages of Privatising a state firm. e=related e=related

 Promoting Efficiency: motive to make profits and cut costs, increasing dynamic efficiency.  Raises revenue for the government.  Promotes competition.  Reduces size of public sector.  Promoting enterprise culture and capitalism.

 Worse allocation of resources, chance of privately run monopolies. Loss of consumer welfare.  More negative externalities as firms ignore them.  Closure of loss making firms. Local bus service.

 Guardian Article  Analyse the evidence. Group 1 Yes. Group 2 No.  Evaluate the effects and provide a conclusion.

 Find a piece of evidence to support your argument for next lesson.