Economics of Regulation

Faculteit Rechtsgeleerdheid
Jaar 2020/21
Vakcode RGAEO50106
Vaknaam Economics of Regulation
Niveau(s) master
Voertaal Engels
Periode semester I a (Blok 1)

Uitgebreide vaknaam Economics of Regulation
Leerdoelen After completing the course, the student will be able to:
  • Apply micro-economic theory to analyze market regulation in terms of costs, benefits and incentives;
  • Explain the reason for government intervention both in (natural) monopolies and in markets of imperfect competition, including international cartels and mergers;
  • Analyze the effect of competition policy (antitrust) and innovation policy on market efficiency;
  • Distinguish the various pricing mechanisms that are applicable to regulating energy markets and determine how those mechanisms affect market efficiency;
  • Describe the economic rationale and economic effects of self-regulation, using international examples;
  • Clarify the impact on market efficiency of external effects, including global environmental pollution, and explain how different forms of regulation affect the internalization of external effects;
  • Write and present a draft paper on the economics of regulation and engage in an international academic discourse with fellow students who provide feedback on that draft.
Omschrijving This course discusses the economic rationale and economic consequences of various types of regulation, including energy market regulation, environmental regulation, cartel and merger regulation, self-regulation and social security regulation. The course concentrates on regulation in general and the regulation of competition in particular, using international examples. There are two major arguments for regulating competition. The first one is that in a free market, firms may agree not to compete, for example with the aim to raise prices, or a firm may grow so big that it can dominate the market. Regulation is geared to preventing abuses of market power that may possibly emerge. Economics of antitrust analyses these issues and distinguishes between economically useful and economically harmful forms of co-operation and competition. The second argument for government regulation is that competition should be avoided if the market is best served by one single firm, a so-called ‘natural’ monopoly. Public monopolies, or private monopolies monitored by public authorities, have been established in the past in sectors such as electricity, gas, water, railways and telecommunications. Recently, many of the former public monopolies have been privatized and some industries (e.g. energy and telecommunications) have been fully or partially deregulated. Economics of Regulation assesses the arguments in favor of and against the regulation of natural monopolies. Various examples of regulation, deregulation and self-regulation from different jurisdictions will be used to discuss the underlying economic theory, varying from energy unbundling to airline cargo cartels and prison gang behavior. Regulatory failure is also extensively elaborated upon. In the final lecture, students present their draft papers in an international discussion environment where they get feedback from other students as well as from the lecturer.
Uren per week 4
Onderwijsvorm hoorcollege, presentatie
(10 2-hour lectures, last week presentations (8 hours))
Toetsvorm paper, presentatie(s)
(Bonuspoints: see remarks.)
Vaksoort m4-niveau, niet-juridisch
Coördinator prof. dr. E. Woerdman
Docent(en) prof. dr. E. Woerdman
Verplichte literatuur
Titel Auteur ISBN Prijs
Economics of Regulation and Antitrust (4th edition, 2005, MIT Press) W.K. Viscusi, J.E. Harrington and J.M. Vernon 9780262220750 ca. €  75,00
  • If taken as an optional course, this course is only accessible for students that have obtained their Law first year certificate (propedeuse) at a research university and for students that have been admitted to a master's degree program within the Faculty of Law. If this course is concluded as part of a bachelor's degree program, these credits cannot be taken into consideration within a master's degree programme.
  • Not available for Exchange students
Opmerkingen A student receives a bonus of 0,5 points on top of his grade for the paper (a) if he attends at least 9 out of 10 classes AND (b) if he submits a one-pager to the lecturer through Nestor at the end of each week on what he has learned from the lecture and the book for his reaearch paper.

The Viscusi text book is also available for free, from the University of Groningen library, as an e-book.
Opgenomen in
Opleiding Jaar Periode Type
LLM Energy and Climate Law 1 semester I a compulsory
Open Colleges 1 semester I a keuze