Difference Between Public and Private sector

Public and private sector companies are required to produce goods and deliver them to the general public. The state like nature or the private nature of the businesses set the two apart. The laws by which they are governed though stay the same in a few cases; in other cases the laws are specified to cover either the private sector or the public sector. This is generally done by the corporate law.

Public Sector

Public sector is a state run or a government run body that provides services for the government and for the citizens of the state also. Generally the public sector needs to step in the picture when the monopoly is taken over by the private sector and the citizens are being exploited. It is the people in the lower class that feels the most burdensome and needs to be protected in which case the public sector provides for the essential services such as public transport. If prices of such services are hiked, the lower class especially would not know how to commute other than their feet or bikes. The public sector is run via the taxes collected by the government.

Private Sector

Business or entities that come under the private sector are those that are run and governed by private individuals. The motive for such organizations to exist is their interest in making profits. This can also be done at the expense of the citizens and is therefore exploitation. However, there are services that the public sector cannot provide and therefore the private sector steps in to cover the niche and provide to the citizens. The four types of companies present in the private sector range from a sole ownership, partnership to a private limited company and a public limited company. The ownership in all four types is based around the capital input made by the contributories. In the case of sole ownership and partnership, the capital is solely the owner’s. In a private limited company and public limited company, the ownership is through the ownership of shares.

Difference between Public and Private Sector

The major difference between the public and private sector is their motive to exist. The public sector is present to cater to the citizens of a country and profit motive is generally not the criteria for them to exist. The private sector firms on the other hand base their existence on making profits. The public sector is run on the money collected by the general public through taxes, which is the income for the public sector. They are also run on state loans. Private sector companies are run by the capital input made by individuals or by share owners. The income is then retained in the company or a part of it is given out as dividends to the share owners.


Both public and private sector at the end of the day provide to the demands made by the citizens. It is their motive to exist that remains different however; both tend to strengthen the economy as both provide employment to the citizens of a country.