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Economics of Regulation (6 ECTS)

Lecturer(s): prof. dr. E. Woerdman (coordinator)

When: Block 1

Brief course description:
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.

Teaching method: Lectures, presentations.

Assessment: Paper, bonus based on short weekly essays and presentations.

*Official course information and schedules during the academic year can be found in Ocasys.

Last modified:13 August 2018 10.17 a.m.