Generating government revenue is a common objective in privatization. This paper asks what determines privatization prices using firm-level data for all 236 Mexican companies privatized between 1983 and 1992. There are three main reasons why net prices—auction prices net of the cost of prior restructuring measures—are low, averaging 54 cents per dollar of assets. First, privatization prices are very sensitive to the level of competition in the auction and restrictions often limited participation. Second, the privatization process took too long, and lengthier privatizations are associated with lower premiums. Third, firm prior restructuring measures absorbed an average of 33 percent of the auction price. Most restructuring measures do not increase price and delay privatization further. Net prices would have increased by 71 cents per dollar of assets if the government had emphasized speed, succeeding in divesting assets in one year less than the average, and firing the CEO were the only restructuring step taken.

Critics of privatization argue that the increased profitability of privatized companies comes at the expense of society. Using data from 97 percent of those nonfinancial firms privatized in Mexico during the period 1983–1991, we study two channels for social losses: (1) increased prices, and (2) layoffs and lower wages. Privatization is followed by a 24-percentage-point increase in the mean ratio of operating income to sales as firms catch up with industry-matched control groups. We estimate that higher product prices explain 5 percent of that increase; transfers from laid-off workers, 31 percent; and productivity gains, the remainder.

In cooperation with Lex Mundi member law firms in 109 countries, we measure and describe the exact procedures used by litigants and courts to evict a tenant for nonpayment of rent and to collect a bounced check. We use these data to construct an index of procedural formalism of dispute resolution for each country. We find that such formalism is systematically greater in civil than in common law countries, and is associated with higher expected duration of judicial proceedings, less consistency, less honesty, less fairness in judicial decisions, and more corruption. These results suggest that legal transplantation may have led to an inefficiently high level of procedural formalism, particularly in developing countries.