![]() The government’s money to fund investment in publicly owned companies and industries comes from taxpayers. Public ownership can scale up these industries without harming consumers. That's because it is hard to scale up the production in such industries: think how hard it is to build a network of electricity submission. This is especially true for natural monopolies with only one firm where it is hard for new firms to enter the market. ![]() Perhaps one of the main advantages of public ownership is that it limits companies from using their monopoly power to abuse consumers in terms of pricing. Some advantages of public ownership include limiting monopoly abuse, profit going back to taxpayers, prioritising the long term over the short term, better labour conditions, and positive externalities. While there are many examples of the process of public ownership, we are going to look at two examples from when the UK government decided to nationalise some of its key industries. ![]() The government will be cautious of the type of externalities a firm has, whereas a private company might ignore the external cost and impact their company has. Private ownership is driven by profit, whereas in public ownership, the incentive is that workers feel like they are part of the company. The difference between public ownership and private ownership lies in the type of incentives and externalities. Examples of private companies include small family-owned businesses and other SME's. This means that the company will not hold a share structure (which it would have had it been public) that enables them to raise funds and further capital. When a company is privately owned, it is not publicly traded. Private ownership is the ownership of industries, firms, and other assets such as housing, railways, or coal plants by private individuals or organisations rather than the state.
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