For example, the reduction of state subsidies may translate into higher prices for many goods and services and trigger popular unrest. Increases in bus fares in Venezuela in 1989 led to widespread rioting. Popular unrest with reform efforts, often linked to austerity programs implemented at the behest of the International Monetary Fund, has been noted in Nigeria, Zambia and numerous other countries. Privatization and other reforms must be instituted with processes that ensure fairness and transparency, not just during their actual implementation, but in the operations of firms and markets after new policies are in place. The use of auctions open to all citizens, which has been introduced successfully for small privatization in Russia and several other countries, is one such process.
Vouchers are another effective way of structuring privatization to ensure broad-based participation.
Effective regulatory institutions must be developed to ensure fairness and competitiveness after privatizations are carried out. Without adequate regulatory safeguards, newly privatized firms may engage in predatory practices, especially in sectors where there is little effective competition. Governments must guard against replacing a public monopoly with a private one. Particularly in the former command economies, where investors have no experience with securities and volatility in stock prices, effective regulatory oversight is an urgent priority to protect the small investor. This complex question troubles policy makers both in the East and West as they search for solutions.