Contestability and economic integration in Western Hemisphere

This paper discusses the harmonization of competition policies in the WesternHemisphere. Using the theory of contestable markets, it presents an analytical frameworkthat shows the requirements for achieving coherence among the different policies thataffect the competition process. According to that theory, the normative parameters formonitoring the conduct of the business community should be subordinated to some specialcharacteristics of each industry, namely, the ratio transaction costs/production costs, thenature of entry barriers, and the interplay between existing technologies and the market size.This approach would allow the immediate involvement of all 34 OAS member countriesin the effort toward the convergence of competition policies in the Western Hemisphere,regardless of the status of national antitrust laws. Indeed, the only requirement for participating in that effort is a reliable data base that would describe the current conditionsof competition in each economy. JEL Classification: F15; L13.