The failure to outsource and divest means that a firm's ability to specialize, focus and compete is diminished. Ultimately, the firm cannot capture sufficient revenue and ceases to exist. With the goal of bringing economic benefits to consumers, governments have a role to play in maximizing competition in both sectors. The economic continuum has socialism and capitalism at opposite extremes with many intermediate gradations. Service is lowest and cost is highest at the socialist extreme.
Cost is lowest and service is highest at the competitive extreme.
Any step in the direction of more competition holds the promise of benefits to consumers. There are privatization experiences where moving government monopoly functions to private monopolies failed to produce benefits because of the lack of competition. On the other hand, the five utilities discussed illustrate the potential of moving a government protected private sector monopoly to a higher level of competition. The notion of benefits to consumers brings government cost accounting to the forefront. The privatization dilemma for government is that certain indirect costs are not known, are not properly accounted, or are not directly recoverable.