In all cases, the empirical evidence strongly supports the view that privatization has positive effects on profitability and efficiency. It also shows that capital expenditures tend to increase after privatization. When the effect is measured in terms of estimated total surplus in a counterfactual basis, welfare increases in almost all the cases under analysis. This result is robust to different definitions of the profitability indicator, and holds for different market structures. Deregulation policies have been shown to speed up the convergence process of firms to industry standards.
Partial privatization has a lower effect on profitability when compared with full privatization.
Firms in more concentrated and regulated markets, though they also go through an important restructuring after the sale, show lower increases in productivity as compared to those that are under the discipline of the market. Eliminating restrictions to foreign direct investment and trade barriers, and government controls on prices and quantities fuels the catch-up of firms to competitive standards. First, it is observed in cross-country studies that profitability increases more and productivity less in regulated or less competitive sectors. This shows that firms are exploiting, at least partially, their market power. Second, in the case studies we observe that consumer surplus is affected by the degree of competition in the sector, even though total welfare changes are positive.