Question

Which one of the following is a claimed disadvantage of privatisation?

Answer 1

Answer:

3. There will be less competition than when the industry was nationalized monopoly

Explanation:

Privatization transfers ownership of state-owned corporations or properties from the government to the private sector. The transfer is through the sale of government-held shares to another company or the general public.

Since state-owned enterprises are large corporations, privatization creates the possibility of forming private monopolies. The private monopolies are likely to dominate the market and stifle out the competition. They are also likely to increase prices as private business is profit-motivated, which is detrimental to consumers.