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Privatization defined. The debate on privatization wars has been persistent in all markets around the world.

It underlies on the major themes of whether the provision of a good or service is vested in the government for the collective good of society or to the private sector, who argues that they can serve the market demand in a more operationally-efficient way. In industries such as telecommunication, roads, and utilities, society has seen the prevalence of market inequities such as monopoly power and externalities. Hence, there is a justification for the government to provide these services in cementing their public role in serving for welfares best interests. However, recent developments of increased demand also increase the intervening power of regulating such monopolies. In essence, the term privatization is defined as the process of turning services that are supplied by the government over to the private sector for provision and/or production (Rosen & Gayer, 2008). Privatization is a market-oriented approach to economic policyveering away from state-ownership to private ownership to leverage the levels of imperfect competition in the market. It is, in effect, the opposite of the concept of nationalization. So how does ownership become a game-changer for the government to turn to privatization as a public policy tool? Neoclassical economics argue that ownership of a firm is not an important variable; as stateowned or privately owned firms are subject to the same product market constraints, thereby implying same constraints in management behavior (Crew & Parker, 2008). In this proposition, only market shares and number of competitors are perceived to be crucial between suppliers and buyers. Now, however, ownership has played a significant role in determining the interests of these owners in response to output and prices. There is an existing presumption that the government lacks the profit-maximizing objective, and could therefore, offer larger output at lower prices. The government can avoid higher rates of returns abusively charged by private owners, as well as cutting corners in services and unethical behaviors. Private owners, on the other hand, argue that governmental bureaucracies over these state-owned

corporation produces inefficiency and service incompetence over the territory of its service delivery, thus the responsibility to provide such good or service must be on the private sector (Hodge, 2008). The arguments to whether it is the state or the private sector who can best provide the services will always be different on the circumstances of the market that the government continues to intervene. For as long as the government is accountable of ensuring that the goods and services that flows in the economy is of reasonable price and quality for the citizens, the use of privatization as a policy tool can be rationalized. References: Crew, M. & Parker, D. (2008). Developments in the economics of privatization and regulation. Edward Elgar Publishing Ltd.: Glos, UK. Hodge, G. (2006). Privatization and market development: Global movements in public policy ideas. Edward Elgar Publishing Ltd.: Glos, UK. Rosen, H. & Gayer, T. (2008). Public finance. 8th International Ed. McGraw Hill Education (Asia): Singapore.