REGULATION AND PRIVATIZATION

Abstract

Abstract Privatization is the process to transfer a property or responsibility from the public sector to the private sector . The term can refer to partial or complete transfer of any property or responsibility held by government. Through privatization, governments seek to become more efficient in running enterprises, both in terms of cost and quality of services. There are two basic sets of economic arguments for pro-privatization and anti-privatization. The first of them is that governments have few incentives to ensure that the enterprises they own have a good performance and the second one is that governments do have an incentive to maximize efficiency in nationalized companies, due to the pressure of future elections. Socialist, liberal, conservative have different positions about the role of government. They propose greater or minimal state involvement and proper matters for public or private sectors. System approach helps politicians to make better decisions in possible privatizations. Regulation and regulatory functions are related to the definition of concepts, bases and techniques for a possible privatization process in a given sector.- A subset of regulatory functions is assigned to manage the privatization of that specific sector. In this way it is possible the regulation of monopolies, entry, network pricing, access conditions, rules for operation and quality and performance standards. This paper is designed to give the widest possible overview of the system sciences applied to regulation and privatization issues. System approach is applied in order to have an interdisciplinary appreciation of this phenomena. The relation between privatization and regulation is analyzed to achieve the best outcomes in privatization after the study of experiences, designs and implementation of many cases in several countries. It has been shown that the greatest gains from privatization are achieved in the pre-privatization period as reforms are made to prepare for the transfer to private hands. As changes may include reforms such as greater transparency and accountability of management, improved internal controls, information systems and better financing, those actions improve performance rather than privatization itself.