In
1988, Cook and Kirkpatrick have identified three main approaches to
privatisation:
·
Change in the ownership of an enterprise
from the public to private sector. Denationalization or divestiture can be the
means to accomplish this.
·
Privatisation through liberalization, or
deregulation, of entry into activities previously restricted to public sector
enterprises. It is argued that the removal of restrictions is intended to
increase the role of competition in the hitherto protected market, a variant of
privatisation will have occurred, even though no transfer of ownership of
assets has been involved.
·
Where the provision of a good and
service is transferred from the public to private sector, while the government
retains ultimate responsibility for supplying the service. Franchising or
contracting-out, of public services and the leasing of public assets to the
private sectors are examples.
Privatisation as
a policy has been allied with various objectives. Introduction or extension of
market forces reflected in the profit motive, competition, greater efficiency
and innovation are expected to benefit the consumers. Privatisation policy has
also been linked with a longing for wider share ownership and a creation of
share-owning democratic system; while in some cases, the policy aims to trim
down the size of the public sector through denationalisation.
“Perspective
Proposals have also been made that in some countries (for example, UK, Malaysia,
China and South Africa); the real purpose of the policy is to reduce the
monopoly power of the public sector trade unions”. But some of the above
objectives may be in conflict. Reducing the size of the public sector by
selling public assets may not be compatible with the goal of efficiency if it
involves merely transferring monopoly power from the public to the private
sector without ensuring competition and rivalry. Maximising the number of
shareholders may be achieved by under pricing of share, which is in conflict
with the aim to maximise the treasury income following the rules and
perspectives of private sector phenomena.
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