• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Microeconomic Concepts - Effects of Privatization of the London Underground.

Extracts from this document...

Introduction

Business Economics - Microeconomic Concepts Effects of Privatization of the London Underground This essay aims to identify the business objectives of The London Underground, a public sector transport group that provides transportation services to the public within London, the potential changes to the business objectives if it were to be privatized. The London Underground, otherwise know as the Tube, is a public sector organization that is a publicly-owned part of the British mixed economy. The Tube is owned and controlled by the government and is a monopoly which takes advantage of economies of scale by being the sole provider of underground rail services to the public. This is supported by London Underground's stated mission; "...to open London's rich potential to all by delivering a dynamic public service that puts customers first." (http://tube.tfl.gov.uk) Being a public sector company the London Underground is subsidized by the government, which is funded by taxation. ...read more.

Middle

As the London Underground becomes partially privatized many new opportunities for investment and improvements in the service may arise. This is due to items such as competition, lower levels of government interference and more efficient organization. Although the London Underground will remain a monopoly as the only underground transport provider, the PPP is a consortium of private companies who each have a share and so, in theory and the government hopes, there will be competition amongst these companies to gain a bigger share by competing for things such as efficiencies or providing a better service. This may result in a greater choice for the public on pricing structures and ticket prices as well as better levels of service. Governments are notorious for red tape and interference, with privatization there will be less of this and so management will be able to act in a way which furthers the interests of the company. ...read more.

Conclusion

(http://tube.tfl.gov.uk) This investment and transfer of control, if properly managed, will improve the quality of the trains, underground stations and other services to consumers. There may be a down side to this of increased ticket prices as the private companies will want to recoup their investments. Privatization of an integral public service such as the London Underground could have repercussions for the users. Public sector monopolies operated by the government are there for the benefit of the consumers, private sector companies will run the services for a profit, although his has its benefits it is important to ensure that the consumer is not taken advantage of. Particularly in the case of the PPP part privatization of the London Underground where the government is still footing the majority of the bill. For these reasons it would be necessary to establish appropriate consumer watchdogs to ensure good services are provided and service targets are met. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level Markets & Managing the Economy section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level Markets & Managing the Economy essays

  1. Marked by a teacher

    Supermarkets in UK - An oligopily

    5 star(s)

    The kinked demand curve theory shows us that firms would lose out if they changed their prices relative to other major players i.e. if the firm increases its price, it will lose out on market share due to an asymmetric response from other competitors.

  2. what is economics

    practise, markets are often unstable and not always in equilibrium o This is called disequilibrium - demand and supply are not equal * Where this happens, the natural forces in the market result in the market price and output moving to the equilibrium position.

  1. Discuss the extent to which privatization of the UK railway has been economically worthwhile

    of travel in order to gain leisure customers for example And to better manage the efficiency of the service. In 2004, there was a 33.3% increase in the number of passenger journeys compared to 1995 figures, And since privatization, there has been a reversal of a 35 year steady decline in passenger journeys.

  2. What are the reasons for governments to own business and assets? Why has ...

    Therefore, public utility companies have a tendency to become 'natural monopolies'. Besides, as public utilities require huge investment and take a number of years before they can recover their investments, private individuals may not be able to gather this

  1. The Rail Industry.

    It would be unrealistic and misuse of resources to build a further comprehensive network of track across the UK. Looking at the natural barriers that exist in the railways in the U.K. one mentioned in section 2 not applicable is that the railways do not control the supply of a

  2. What are the origins of the Pension Crisis and what can be done to ...

    Gordon Brown decided that the best way of alleviating pensioner poverty while holding taxes below mainland European levels was to keep basic pensions at "pocket-money levels" and to give decent-sized benefits only to those with hardly any saving. As saving rise, benefits drop.

  1. What Are The Effects Of Tescos Oligopolistic Market Structure, On Both Consumers And Producers?

    Grocery Sales are available within delivery range of selected stores, goods being hand-picked within each branch. Tesco has also upgraded its software through 'Business Systems UK Ltd.' Whilst the upgrades were being performed, The Times made investigations and wrote in the paper: 'Tesco, the UK's largest supermarket retail organisation, has

  2. Economy and how it affects my business selling tables

    These two elements are compared and this determines the fiscal policy. The fiscal policy can be either contractionary or expansionary and both possess their own benefits as well as their disadvantages in their features and qualities. Important elements that play a vital role with the U.K?s fiscal policies are expenditures

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work