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Privatization

Definition

Privatization is the transfer of ownership or control of a public service or industry from the government to private entities. It involves shifting responsibility for managing and operating services like water supply, waste management, or energy production to profit-driven companies.

Analogy

Imagine a school cafeteria that used to be run by the school itself but is now operated by a private company. The company's goal is to make money, so they may cut corners on food quality or increase prices. This represents how privatization can impact essential services.

Related terms

Public-Private Partnership (PPP): A PPP is a collaboration between the government and private entities to provide public services. It combines resources and expertise from both sectors while sharing risks and benefits.

Deregulation: Deregulation refers to reducing or eliminating government regulations in certain industries. It aims to promote competition and efficiency but can also lead to reduced oversight and potential negative impacts on the environment.

Common-Pool Resources: Common-pool resources are natural resources that are collectively owned or accessible by a community. Examples include forests, fisheries, or groundwater reserves. Privatization of these resources can lead to overexploitation and inequitable access.