Privatization and Regulation in Latin America

Abstract

Currently, one of the most active fields in microeconomics is the Economics of Regulation and one of the distinctive features of this dynamism is that it has occurred both at the theoretical and empirical level. However, the main reason why regulation has become a major topic in the present situation of developing countries, and particularly in Latin America, are its implications for public policy. This is a consequence of the fact that the initial implementation of many of these developments have occurred in countries that recently underwent deep processes of restructuring and redefinition of institutions. This paper argues that the quality, effectiveness, and scope of regulation are determined in a very fundamental way by the institutional framework where it is applied. More specifically, key elements of the institutional setting are: property (whether it is public or private), the legal framework, the availability of alternative instruments for regulation and the general framework given by competition policies.