Economics of Regulation

Course Description: 

The course gives an overview of the economic concepts, theoretical and practical approaches used in market regulation.

Government interventions into market developments could be warranted because of several welfare-distorting factors, but these policies need to be well understood in order to avoid further market failures. We will concentrate on the regulatory policies and approaches applied in industries where the core of the problem lies in the significant market power of incumbent firms, and so their market behavior needs to be regulated. Most network industries fall into this category (telecommunications, energy, post services, cable TV), and so we will briefly study these industries as well. Social regulation (concerning health, safety, environment) will not be touched in this course, and there are separate courses on competition policy (antitrust), which is the other main form of market-specific policy intervention.

The aim of the course is to get acquainted with the basic principles, forms and models of regulations, to understand how economics shapes (or should shape) the various regulatory approaches.

Learning Outcomes: 

Students are expected to gain the ability to identify market distortions and possible ways to overcome them. They are expected to get more insights and experience on how to discuss regulatory policies in a presentation and written assignment form, both from a theoretical and empirical point of view. They should also be more familiar with some microeconomic tools to model imperfectly competitive markets.

  • 50% based on a written exam at the end of term. It will be an "open notes exam": you can bring your notes on paper, but not any printed, photocopied or electronic materials. The exam will contain some conceptual and theoretical questions and discussion of regulatory approaches.

There will be no specific questions to give microeconomic proofs or to solve computational exercises at the exam, but you can be asked to link your reasoning to some theoretical results we discussed in class.

You can check a previous exam at the e-learning site.

  • 25% based on an individual term paper on a selected topic. See later for more details. Deadline of submission: first Monday after the end of exam period.
  • 25% based on a seminar presentation in one of the last two classes. See later for more details. Depending on class size, presentations can be done by pairs. Deadline of submission of the presentation file: beginning of last class week (exact date to be specified later).
  • Max 5% bonus based on active class participation: you can still have 100% without this part.

1st year course on Microeconomics

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