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Demand for services
. There is a relationship between the price charged for something and the 
'demand'. In the public sector demand for many services is practically limitless. 
(d) 
Limited resources
. Despite the potentially huge demand for public services, constraints on 
government expenditure mean that resources are limited and that demand cannot always be met. 
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CHAPTER 1
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BUSINESS ORGANISATIONS AND THEIR STAKEHOLDERS 
 
9 
2.4.2 Advantages 
(a) 
Fairness
. The public sector can ensure that everyone has access to health services. 
(b) 
Filling the gaps left by the private sector
. This can be done by providing 
public goods
, such as 
street lighting. 
(c) 
Public interest
. Governments once believed the public interest was best served if the state ran 
certain services. 
(d) 
Economies of scale
. Costs can be spread if everything is centralised. 
(e) 
Cheaper finance
. Taxes or borrowing backed by government guarantees might be cheaper than 
borrowing at commercial rates. 
(f) 
Efficiency
. The public sector is sometimes more efficient than the private sector. The UK's 
National Health Service, despite its well-publicised problems, has lower administration costs and 
serves more of the population than the private sector does in the US. 
2.4.3 Disadvantages 
(a) 
Accountability
.
 
Inefficiency may be ignored as taxpayers bear losses. 
(b) 
Interference
.
 
Politicians may not be familiar with the operation of a business and yet political 
pressures and indecision may influence adversely the decision-making process. Pressures to get 
elected may lead to the deferral of necessary but unpopular decisions. 
(c)