PRIVATE SECTOR: A short-cut term that combines the households and businesses in the economy into a single group. This term should be contrasted directly with public sector, which is a comparable short-cut term for government. The distinction between private sector and public sector reflects the two basic methods of answering the three questions of allocation--markets and government. Markets make use of private ownership and control of resources (hence the term "private" sector) for voluntary allocation decisions.

     See also | household sector | business sector | public sector | government sector | three questions of allocation | ownership and control | liberal | conservative | government functions | market failure | fifth rule of imperfection | public choice | normative economics |

PRIVATE SECTOR, AmosWEB GLOSS*arama, http://www.AmosWEB.com, AmosWEB LLC, 2000-2021. [Accessed: October 26, 2021].

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Information is not equally available to everyone. Asymmetric information results because efficient information search inevitably stops short of compete information. Some people obtain more benefits from information than others, are willing to incur higher search costs, and thus end up knowing more. Or they incur lower information search costs and have easier access to the information. In a market, sellers tend to have more information about the good than buyers. Asymmetric information gives rise to adverse selection, moral hazard, and the principal-agent problem. These problems can be lessened through signalling and screening.

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