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MGSC05H3 (39)
Lecture 6

MGTC45-Lecture 6

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Management (MGS)
Andrew Stark

MGTC45 Lecture 6 Privatization  When governments decide that there is a service that they traditional provide, but a private business can do it better, then a great business opportunity arises  There is a distinction to be made about individual and jointly consumed services/good o Class non-excludable good is a lighthouse o An example of a jointly consumed good is a concert Individual Jointly Consumed Excludable Private Goods Toll Goods Non-excludable Common Pool Goods Public good o Sometimes the 401 can be either a public good or a common pool good depending on the state of traffic o Many goods would fall in the category of common pool good o Excludable means, we could exclude people if we wanted to o Healthcare is much like a private good o Police services are generally considered a public good o Nature of fire, fire services cannot be excludable o Paramedics wouldn’t fall under the public goods category but rather the private goods o National defence is also public  The province sells liquor, it’s a private good that is privatized  Toll goods can be privatized  Common Pool goods are not good candidates as they cannot be fully enforceable on exclusivity and in reality, to police the good, you have to be the government in enforcing the laws  Margaret Thatcher decided to privatize water and electricity o When Privatized the government had a higher standard for their services and products  When companies are state owned there is a conflict of interest, thus there is a higher standard when privatized than when it is state owned  Privatization and increased regulation goes together  Question: Do the liberals support it?  Air Canada was doing very well and the government decided to privatize it  The Logic of Collecti
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