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Module

ECO2011 : Economics of Regulation

  • Offered for Year: 2021/22
  • Module Leader(s): Dr Till Weber
  • Owning School: Newcastle University Business School
  • Teaching Location: Newcastle City Campus
Semesters
Semester 2 Credit Value: 10
ECTS Credits: 5.0

Aims

To develop students' understanding of the relationship between government and industry, focusing on the ways in which the public sector seeks to influence the conduct and performance of different sectors of the economy, mainly those characterised by monopoly.

Outline Of Syllabus

1. Introduction to Economic Regulation.

Market failures and Normative Analysis of Regulation. Monopoly and monopoly inefficiencies. Natural Monopoly: Strong and Weak. Alternatives to regulation.

2. Monopoly and Regulation: Optimal Pricing.

Ramsey Prices, Peak Load Pricing, Multi-part tariffs, Block Tariffs.

3. Regulation under Asymmetric Information.

Hidden Action and Hidden Costs. Loeb and Magat Mechanism. Baron and Myerson Mechanism.

4. Regulation in Practice.

Rate of Return Regulation (and uncertainty). Cost of Service Regulation. RPI-X regulation. Other forms of regulation.

5. Economic Theories of Regulation.

Criticisms to Normative Analysis of Regulation. Stigler's Models of Regulation. Peltzman's model of regulation. Becker's Models of Regulation.

6. Competition and Liberalisation.

Regulation in Network Industries. Regulated Firms in Unregulated Markets. Interconnection and Access Pricing. Dynamic issues in regulation.

7. Further Topics in Regulation.

Teaching Methods

Teaching Activities
Category Activity Number Length Student Hours Comment
Scheduled Learning And Teaching ActivitiesLecture72:0014:00PiP lectures
Scheduled Learning And Teaching ActivitiesLecture11:001:00PiP lectures
Guided Independent StudyAssessment preparation and completion130:0030:00N/A
Guided Independent StudyDirected research and reading133:0033:00N/A
Scheduled Learning And Teaching ActivitiesSmall group teaching31:003:00PiP seminars
Guided Independent StudyIndependent study119:0019:00N/A
Total100:00
Teaching Rationale And Relationship

1. Lectures give overview of main theoretical ideas and how to obtain theoretical conclusions from economic models.

2. Seminars provide the opportunity for students to work in a group context, critically discuss issues and apply the theoretic developments to real world examples, and for solving analytical problems.

Assessment Methods

The format of resits will be determined by the Board of Examiners

Exams
Description Length Semester When Set Percentage Comment
Written Examination1202A100N/A
Formative Assessments
Description Semester When Set Comment
Prob solv exercises2MSeminar questions provided
Assessment Rationale And Relationship

Exam tests understanding of the economic theory and its conclusions related to the regulation of industry and their application to real market situations. The written exam will assess the debth and breadth of understanding of concepts and methods taught.

Online alternative in case in-person assessment cannot take place: Online exam.

Reading Lists

Timetable