Public Sector Business Ownership
Public Sector Business Ownership
The private sector of the economy consists of businesses owned and run by private individuals and organizations that usually, but not always, aim to earn a profit. They operate independently of the government, although need to operate within the rules and regulations in the country.Â
Examples of private sector businesses, include the following:
Sole traders
Partnerships
Private Limited Companies
Public Limited Companies
Social enterprises, including cooperatives
Students often claim that the difference between business organizations operating in the private sector and public sector is that the former aims for profit whilst the latter aims to provide a service. Whilst this is not entirely incorrect, there are businesses that operate in the private sector that do not primarily aim to earn a profit for their owners. Examples include traditional charities, non-governmental organizations (NGOs), and not-for-profit social enterprises.
Business organizations that operate in the public sector consist of those controlled by a regional and/or national government, with the main aim being to provide essential goods and services for the general public. Such businesses can, but do not always, directly charge customers for such services. In some cases, such as government housing or state-funded education, the service is provided by and/or funded by the government.
Examples of such goods and services deemed to be of benefit to society, but would be underprovided without the public sector, include:
Infrastructure (such as communication networks, transportation networks, road and highway networks, waste disposable systems, and flood control systems)
Housing (public and social housing)
Education
Renewable energy
Museums
Health care services
National defence (national security)
Renewable energy
Public parks
Health care services
Renewable energy
Refuse collection
Emergency services (ambulance, fire and police).
The table below outlines the main features of firms in public and private sectors of the economy, and how they differ.
Owned and operated by private individuals or businesses
Owned and operated by government bodies and state-owned firms
Driven by the goal of making profits for private owners and shareholders
Driven by the goal of providing services to the general public
Includes sole proprietorships, partnerships, limited liability companies, and social enterprises
Includes government departments (such as the tax authorities), public enterprises, and regulatory bodies
Operates based on market forces of demand (such as consumer choice) and supply (such as competition)
Operates based on government decisions, policies, and regulations
Significant employer contributing to the economic growth and development of the country as a whole
Significant employer providing stable employment and essential public services