ABSTRACT
This chapter clarifies the meaning of 'privatisation' as it relates to education, and indicates the sort of questions that an economist would ask about a privatised system. It focuses on the school system. The chapter defines a purely privatised school system as one that was fully privately owned, privately financed and privately controlled. A pure private educational system would reflect the strengths and weaknesses of the market system. It would be responsive to demand, so that the dominant pressure would derive from income, and to a lesser extent from preferences. If one wants to modify the purely private system, the topics one needs to consider are: the role of public subsidy, the role of public control, and the role of public provision. All of these must be placed within the context of a broadly privatised school system. The case for public subsidy is partly a matter of externalities, and goes back to the earliest debates on public involvement in education.
