MGSC05H3 Lecture Notes - Lecture 6: Bt Group, Private Good, Public Good
Document Summary
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: class non-excludable good is a lighthouse, an example of a jointly consumed good is a concert. The province sells liquor, it"s a private good that is 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: 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. Air canada was doing very well and the government decided to privatize it.
