Privatization is rooted in the free-enterprise economic system, and the efficiencies produced by competition. The concept describes the process whereby the private sector performs functions previously provided by a public sector, government unit.

Privatization already exists to a limited degree Downriver, although original research into this area of economic development did not exist until this study.

Several variations of privatization are: [19]

Contracting Out – a private sector unit provides a product or service for compensation. Private garbage collection is one of the most best examples of contracting out in the Downriver area.

Franchising – a private sector unit is given a specific territory or marketplace. Franchising can also be related to shedding, as in the example of privatized hospitals.

Shedding – a public sector, government unit sells off its assets or services which are then either undertaken by a private firm or discontinued. Most international examples of privatization fit into the category of shedding, such as when a national government sells a public airport, as the Thatcher government in Great Britain has on several occasions. Ecorse Receiver Louis Schimmel has used shedding as a strategy to sell the Department of Public Works Building and city ice arena.

User Fees – a public sector, government unit applies the cost of a service to the consumers of the service. The user fee introduces a pricing mechanism into the delivery of a government service, imposing a cost only on those who choose to use it, while giving others the option not to purchase the service. The user fee allocates the cost of public services more equitably, and reduces government control to a minimum. Admission fees to Downriver public ice arenas and other recreational facilities fit the definition of user fees.

Vouchers – a public sector, government unit provides a benefit or service, but gives the user maximum flexibility to select from competing private vendors. Some suggest that education be considered a voucher candidate.

For Downriver community leaders, it is extremely important to realize that business firms "vote with their feet," so to speak, in the economic marketplace. An important aspect of economic development is not just tax burden, but the mix of taxes and services. [20] The high and increasing tax burdens of the Downriver area can only be offset by extraordinary public services. Otherwise, they become economic disincentives. Unfortunately, this has not been generally viewed as the case in the Downriver area.

Downriver has generally been perceived as an area of inefficient municipal government. Two communities in particular have contributed to this perception – Ecorse and River Rouge although other Downriver communities are providing questionable services, and other services in a questionable manner.

Privatization has played a role in improving economic development possibilities in Ecorse, while the concept is being considered in River Rouge.

In Ecorse, privatization of public services has successfully been implemented to reduce a $6 million budget deficit. [21] Contracting out and shedding have both been utilized. In River Rouge, privatization is an option for reducing the existing $4.4 million budget deficit.