Advantages and Disadvantages of Nationalization

Advantages of nationalization

 · They benefit from economies of scale (Bigger is better) which means that the prices to consumers is relatively lower than if we had a number of small firms.

· A monopoly owned, run and controlled by the government will stop the consumers being exploited.

· The government can manage the economy by controlling the important industries.

· The government can invest money and make their service more efficient.

· Companies owned and run by the people for the people take social costs (pollution etc.) into account and the profit goes back to the people.

The disadvantages of nationalization

1. Low performance

When the ownership is in public sector, the employs do not work for profit and do not there performance and efficiency of the employs remains poor.

2. Lack of competition:

Competition is necessary for development and increasing the production. Nationalization has decreased the spirit of competition.

3. Favoritism:

The management of nationalize will provide jobs to there favored persons because the political leaders have influence upon the state authorities.


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