Economics of Regulation (Strategie und Wettbewerb 3)

Description and Objectives

This course covers the origins, aims, methods and effects of economic regulation. The main point of emphasis is the importance of market structure and industrial performance, including the strategic interaction among firms. We will examine the behavior of individual markets, focusing on the determinants of market demand, investment behavior, market power, and the implications of government regulatory behavior.

The course will provide the theoretical foundation for economic analysis while allowing the student to apply sound reasoning to actual legal cases or case studies. The course consists of three parts. First, we will review firm behavior and the theory of the market. Once the foundations are well understood, we will then move on to the second part of the course, where we will study market regulation. Here, we will mainly look at the behavior of natural monopolies and regulatory options for dealing with them. Finally, in the third part we are going to analyze recent regulatory and deregulatory experiences in Germany and in Europe; with a special emphasis on the developments in the telecommunications, energy, and transportation sectors.

Prerequisites

Students taking this class should be familiar with basic concepts in Microeconomics as provided in the course "Mikroökonomik II".

Textbook and Lecture Notes

The assigned readings in this will be selected to provide a balance of principles, tools and applications. The basic text for the course is W. Kip Viscusi, John M. Vernon, and Joseph E. Harrington, Economics of Regulation and Antitrust, 4th. edition (MIT Press, 2005).

This is the main text and it will be supplemented with lecture notes and additional readings.