Privatisation of public services and the natural monopoly

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Privatisation of public services and the natural monopoly

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This article also appears in Alfred Kahn and Sheila Kamerman, eds. The Meaning of Privatization Paul Starr Privatization is a fuzzy concept that evokes sharp political reactions. It covers a great range of ideas and policies, varying from the eminently reasonable to the wildly impractical.

Yet however varied and at times unclear in its meaning, privatization has unambiguous political origins and objectives. It emerges from the countermovement against the growth of government in the West and represents the most serious conservative effort of our time to formulate a positive alternative.

Privatization proposals do not aim merely to return services to their original location in the private sphere. Some proposals seek to create new kinds of market relations and promise results comparable or superior to conventional public programs.

Hence it is a mistake to define and dismiss the movement as simply a replay of traditional opposition to state intervention and expenditure.

The current wave of privatization initiatives opens a new chapter in the conflict over the public-private balance. This Article attempts to clarify the meaning of privatization as an idea, as theory and rhetoric, and as a political practice.

In the process I hope to explain why I generally oppose privatization, even though I favor some specific proposals that privatization covers. But apart from this political judgment, I take privatization seriously as a policy movement and as a process that show every sign of reconstituting major institutional domains of contemporary society.

Privatisation of public services and the natural monopoly

Privatization as an Idea In the ideological world we inhabit, contesting interests and parties use "public" and "private" not only to describe but also to celebrate and condemn.

Any serious inquiry into the meaning of privatization must begin, therefore, by unloading the complex freight that the public-private distinction carries. In this section I analyze, first, the general uses of the public-private distinction and, second, the recent political application of the concept of privatization.

The Public-Private Distinction and the Concept of Privatization The terms public and private are fundamental to the language of our law, politics, and social life, but they are the source of continual frustration.

Many things seem to be public and private at the same time in varying degrees or in different ways. As a result, we quarrel endlessly about whether some act or institution is really one or the other.

We qualify the categories: This group is quasi-public, that one is semi-private. In desperation some theorists announce that the distinction is outdated or so ideologically loaded that it ought to be discarded, or that it is a distinction without a difference.

Yet the terms can hardly be banished nor ought they. The frustration with these ubiquitous categories partly arises because public and private are paired to describe a number of related oppositions in our thought. At the core of many uses are the two ideas that public is to private as open is to closed, and that public is to private as the whole is to the part.

In the first sense, we speak of a public place, a public conference, public behavior, making something public, or publishing an article. The private counterparts, from homes to diaries, are private in that access is restricted and visibility reduced. The concepts of publicity and privacy stand in opposition to each other along this dimension of accessibility.

Public is to private as the transparent is to the opaque, as the announced is to the concealed. Similarly, a person's public life is to his or her private life as the outer is to the inner realm.

On the other hand, when we speak of public opinion, public health, or the public interest, we mean the opinion, health, or interest of the whole of the people as opposed to that of a part, whether a class or an individual. Public in this sense often means "common," not necessarily governmental.

The public-spirited or public-minded citizen is one concerned about the community as a whole. But in the modern world the concepts of governmental and public have become so closely linked that in some contexts they are interchangeable.

The state acts for the whole of a society in international relations and makes rules binding on the whole internally. Public thus often means official.

Natural monopolies exist when one firm dominates an industry

In this sense a "public act'' is one that carries official status, even if it is secret and therefore not public in the sense of being openly visible. Indeed, according to the Oxford English Dictionary, private originally signified "not holding public office or official position.

These different contrasts between public and private lead to some apparent conflicts in defining what lies on each side of the boundary.Does Privatization Serve the Public Interest?

privatization program that included the sale of its telephone monopoly, of a good or service, whether it is public or private, is far less. Natural monopolies.

A natural monopoly is a distinct type of monopoly that may arise when there are extremely high fixed costs of distribution, such as exist when large-scale infrastructure is required to ensure supply.

Advantages and problems of privatisation | Economics Help

Examples of infrastructure include cables and grids for electricity supply, pipelines for gas and water supply, and networks for rail and underground. John FitzGerald: Regulating private and public monopolies the best solution is to retain the natural monopoly in public ownership.

The privatisation of urban bus services in other. Privatization of Natural Monopoly Public Enterprises: The Regulation Issue RALPH BRADBURD* ly pfivatizing their public enterprise natural monopolies that provide services corre- In analyzing the effects of natural monopoly privatization and deregulation, it will.

3. Natural Monopoly: – What is natural monopoly? A natural monopoly occurs in an industry where a single firm can produce output or supply services in a market at a lower per unit cost than what two or more firms can, (telephone industry, electricity and water supply are .

The Meaning of Privatization. Paul Starr. Privatization is a fuzzy concept that evokes sharp political reactions.

It covers a great range of ideas and policies, varying from the eminently reasonable to the wildly impractical.

A privatised monopoly is still a monopoly, and consumers pay the price