ABSTRACT
This chapter discusses the relationship between the size and structure of public enterprise with income distribution. As the size of public enterprise expands, the profit opportunities of private entrepreneurs are narrowed. And there will be effects of primary income distribution through changes in property ownership in the long run. The investments in public enterprises, most certainly in their initial stages, are made possible mainly through government borrowings. Such borrowings are likely to be at lower than market rates of interest. Public enterprises can be a vehicle of enhancing wage incomes. If such a result is favoured on distributional grounds, they can be considered an instrument of public policy. Where a public enterprise ends up with a deficit, certain distributional consequences follow. Experience suggests that the distributional results of public enterprises have been essentially in favour of the employees and less so in favour of consumers and that their operating results have implied a general disadvantage to the taxpayer.
