Quasi Private: Everything You Need to Know
When a corporation is quasi private, it means that it operates in the public sector but also receives backing from the government.3 min read
When a corporation is quasi private, it means that it operates in the public sector but also receives backing from the government. The branch of government that supports a quasi-private organization is usually mandated to provide some type of service to the public.
What Are Quasi-Private Corporations?
When a branch of the government provides backing to a corporation in the private sector, this corporation is known as quasi-private. Although these corporations do operate in the private sector, they are linked to the federal government in some way. Executives and managers in these companies, however, do not work for the government.
In general, a quasi-private corporation was once a government agency but has since transitioned into a separate private industry. Sometimes, these companies will trade their shares on stock exchanges. A quasi-private corporation is a type of public-purpose corporation.
Both of these corporations are created to serve the public, with the main difference being that quasi-private corporations are not operated by the government. They do, however, have a mission that's chartered by the government and receives government funding. Unlike traditional corporations, creating value for shareholders is not the main purpose of a quasi-private corporation. Instead, its main goal is to fulfill their public purpose.
These corporations are meant to benefit the general public by improving its convenience, welfare, or comfort.
Quasi-private corporations can come in many different forms:
- Telephone companies
- Energy companies, including electric, oil, and gas
- Water companies
Commonly, these corporations are called public service corporations. Many of these corporations are considered important tools for public policy, as they can usually be operated more cost effectively than full public companies. In addition, quasi-private corporations are generally subject to fewer restrictions than public companies.
Investing in quasi-private companies is considered very low risk due to the assumption that the government will not allow these companies to fail. That being said, these companies must put its public mission ahead of the interests of its stockholders.
When a public-private corporation receives funding from the government, these funds are usually meant to cover ongoing losses. Typically, public-private corporations experience losses because they charge much lower prices than would be charged by a strictly private corporation.
A quasi-public good will usually share characteristics with goods in both the public and private sector, including:
- Partial diminishability
- Partial excludability
- Partial rejectability
- Partial rivalry
Roads and bridges could both be considered quasi-public goods. Because quasi-public goods are typically not subject to the free market, they are usually considered to be very inefficient. For instance, it would be possible for a private company to build roads if they had the ability to cover these costs by charging drivers.
The problem is that it would be unlikely that private companies could fully meet the public's infrastructure and transportation demands with such a system. Toll roads, for example, are extremely inefficient because drivers must slow their vehicles to pay the toll, resulting in traffic congestion that would not exist if the toll system was not in place.
It's possible that new technology could help to solve these different problems. Over time, new technology may make it possible to transition quasi-public goods into completely private goods.
Laws That Apply to Entities
Based on the Freedom of Information Act, agencies are required to make some records publicly available for examination. Certain exceptions to this rule are in place. For example, government bodies such as Congress are exempt from the requirements of the Freedom of Information Act. Rules at the state level determine what state offices are required to disclose their records.
Before requesting records from a government office, you should check to make sure that they are subject to the Freedom of Information Act. The President, including his advisors and staff, are exempt from these disclosure requirements. The Office of Management and the Executive Office of the President, however, are subject to these rules.
Other parts of the executive branch, including cabinet offices, are also required to make their records subject to public inspection. This includes:
- The Department of Justice
- The Department of Homeland Security
- The Department of Treasury
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