CASE 2-Privatization can also have different impacts on income groups through prices and access to services. First, privatization can lead to a fall in prices if it is accompanied by increased competition. In addition, if private management leads to efficiency gains, some of the savings can be passed on to consumers. However, prices may increase if they were previously below cost-recovery level. The distributional impact depends on how the consumption of the firms' goods and services varies by income levels. Access may increase if the privatized business is expanded through investments which could not be undertaken in public ownership. However, private owners may decrease their engagement in specific, low-return market segments, which may disproportionately affect the poor. Price increases are common following privatization in network or infrastructure industries, along with increases in the quality of services. On the one hand, subsidized services tend to benefit relatively wealthy consumers more than poorer ones; as such, they may be relatively more impacted than the lower-income segment by privatization. On the other hand, price increases following the privatization of electricity and water will increase the burden of poorer consumers, especially if it is accompanied by the end of illegal water and electricity connections 1. Analyse the policy of Privatizationand explain the benefit to the consumer. (10 points) 2. What do you mean by subsidized services and which segment of population are benefited? (10 points)