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Privatisation debate, p. 261.

45-51 labour nationalised coal, electr, gas etc.

51-64 steel, transport to private

64-70 steel national

77BP, 88Steel, 84BT

Internal markets(quasi markets)11.    competition in public sector and contracting out and opting out


1.         Efficiency in resource usage(coz management is responsible for shareholders and

2.         competition

a.      customers can have alternative suppliers

b.      no collusion

c.      new firms can access

3.         No Bureaucracy.

4.         More incentive.

5.         Declining industries (state is inflexible).

6.         The corporate state is more democratic.

7.         Political interference in nat. industries.

8.         Profit(60b) when sold + taxes following

9.         increasing consumers choice

10.        share ownership(staging)

11.        increased labour flexibility


1.         Economies of scale.

2.         Externalities.

3.         Capital expenditure.

4.         abuse of monopoly.

5.         Control of the economy

6.         no special pricing policies-Socially needy customers

7.         social benefits

8.         Strategic reasons

9.         Industrial relations

10.        Socialism(major reason)

11.        Loss of long-term revenue

12.        natural monopolies

13.        tendering has reduced workers pay/conditions

14.        pay determined locally, not nationally, trade unions oppose

15.        no politician is accountable for failure

16.        trial error RPI-X


Was vertically integrated(transmission and generation). Now broken up-Nuclear Power(nat), National Power(nat monopoly, priv, RPI-3) and PowerGen(priv). OFFER regulates. Regional electricity co.(REC) own NGC that searches for the lowest price. Nuclear provides basic 20%. New Independent Power Producers with gas have contracts for 15 years. Now price control by trial and error as share prices rose and REC made bonuses to shareholders. Workforce -20%


1.     To break even (AC=AR) in long run.

2.     To cross subsidise different customers should be avoided.

3.     Meet financial objectives imposed by the state.

4.     Social cost and social benefit analyses must be used.

Average incremental costing (AIC) was adopted (easier)=

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