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Public Versus Private Production Assignment Question -

Discussion 1 - Equity, Efficiency, and Cross-Subsidization

Charging higher prices to one group of consumers in order to subsidize lower prices for another group is called cross-subsidization. The United States Postal Service claims that one reason why it cannot provide services as cheaply as private firms is that it is required to serve rural areas without charging them more than urban areas. As their website notes: "The U.S. Postal Service is the only delivery service that reaches every address in the nation, 150 million residences, businesses and Post Office Boxes" . Given that it costs more to serve sparsely populated areas than densely populated areas, cross-subsidization is occurring with the support for one service provided by the profits generated by another service area. Many countries cross-subsidize postal services, telecommunications, and broadband access. The policy question is whether to support losses in the cost of providing services to sparsely populated areas by taxes or by raising prices on users in profitable areas.

An analysis of the consequences of cross-subsidization between public and private production in the United States or nation of your choice. Your analysis should address the following:

  • Describe at least two examples of cross-subsidization, such as postal services, telecommunications, and broadband access.
  • Explain efficiency consequences arising from identified cross-subsidization examples.
  • Explain equity consequences arising from identified cross-subsidization examples.

Discussion 2 - Privatization of Public Enterprise

The appeal of privitization reflect[s] both the ideological desire for small government and a belief in the superior economic performance of the private sector.

Mike I. Obadan, The Economic and Social Impact of Privatisation of State-Owned Enterprises in Africa

Proponents of privatization say that the private sector can produce many services more cost efficiently than the public sector.

In the past two decades there has been extensive privatization of public enterprises. Governments often outsource some of their functions to private and nonprofit organizations. Reasons include cost savings, risk management, and accommodating fluctuating demand for a service. For example, in 1992, the Australian government sold their nationally run airline to industry leader Qantas, where it has experienced even greater success and stability (Qantas, 2005). For this Discussion, consider the following examples: The U.S. government and Conrail, the French government and Credit Lyonnais, and the British government and British Telecom.

An evaluation of arguments for and against privatization of public enterprises. Your evaluation should include the following:

  • A description of one of the three privatization examples above
  • An analysis of the reasons for and against the privatization, with a list of your information sources
  • An opinion about the soundness of the reasoning for or against the privatization

Assignment - Equity, Efficiency, and Social Security

More than 170 nations have social security systems, which can provide services and support to the needy, aged, disabled, neglected, and temporarily unemployed. The U.S. Social Security Administration (SSA) compiles information about both public and private sector pension systems from around the world, including reports on the latest development and research. This office relies on information from the International Social Security Association, which is a nonprofit organization that provides an information resource to social security agencies worldwide, with a mandate of supporting and promoting social security. As the world's population ages, nations will confront the costs of caring for people who are no longer able to contribute by working. For this Assignment, consider the challenges facing governments tasked with caring for their aging populations. How will this be done? Who will pay the costs?

In a 4-page paper, respond to the following topic:

  • Analyze possible equity and efficiency effects of a national social security system of your choice, which can include the United States. Be sure to clearly identify the system you are analyzing and provide necessary references.
  • How does the formula used by a given social security system affect the benefits of the system?
  • How does the eligibility age for a social security system affect the allocation of benefits?
  • If the system allows individual contributions to be placed in private investment accounts, how does this affect the system?
  • Does the system provide cost of living adjustments to benefits? How do these adjustments affect the system?

Be sure to support with specific references to the Learning Resources and other peer-reviewed sources and provide full APA-formatted citations for your references.

Attachment:- Assignment Reading Files.rar

Public Economics, Economics

  • Category:- Public Economics
  • Reference No.:- M93108618
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