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Privatization can be a problem depending on how much competition there will be, and how efficient existing arrangements are. Prices can only be squeezed so much
by vintermann 10y ago
Privatization can be a problem depending on how much competition there will be, and how efficient existing arrangements are. Prices can only be squeezed so much.
Some people act as if unlimited competition will drive prices to zero, but it won't - it will just drive it asymptotically closer to the marginal cost of production, which isn't necessarily all that far away from what you pay today.
And on the way towards that limit, unpleasant things can happen. The benefits of "cheating" of all sorts, from reading the tender specification like a malicious genie to tax fraud and worse, grow higher the closer you get to the marginal cost of production boundary.
At some level of competition, the cost of policing - keeping actors honest - eclipses the savings.
- candiodari 10y agoAnd government control is no guarantee of low prices. Real estate in China would be one example, or oil prices would be good examples. Real privatisation (meaning not a granted monopoly) is as close as we seem to be able to get to good prices, choice, and some incentive for these businesses to do well. How that can be implemented in practice is often a tough question, mostly in the industries most complained about : phone, cell, internet. All of which has government or private monopolies in the chain, and in virtually every case those are the source of the complaints. But no worries: in Australia the NBN (the new government monopoly) is/was going to fix everything ! Of course, now the government is fucking with it and serious cracks are showing : it seems to create an unfair advantage for the incumbent telecom operator, who doesn't seem to be paying the same prices as everybody else ... (and of course it's the fault of party X, never mind that now both parties have messed with it)