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ECO2011 : Economics of Regulation

  • Offered for Year: 2019/20
  • Module Leader(s): Dr Till Weber
  • Owning School: Newcastle University Business School
  • Teaching Location: Newcastle City Campus
Semester 2 Credit Value: 10
ECTS Credits: 5.0


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

Topic 1. Introduction to Economic Regulation

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

Topic 2. Monopoly and regulation : Optimal Pricing
Ramsey Prices, Peak Load Pricing, Multi-part tariffs, Block Tarriffs.

Topic 3. Regulation under asymmetric information

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

Topic 4. Regulation in Practice

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

Topic 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.

Topic 6. Competition and Liberalisation

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

Topic 7. Regulation experience in Britain.

Teaching Methods

Teaching Activities
Category Activity Number Length Student Hours Comment
Scheduled Learning And Teaching ActivitiesLecture11:001:00N/A
Guided Independent StudyAssessment preparation and completion132:0032:00N/A
Scheduled Learning And Teaching ActivitiesLecture72:0014:00N/A
Guided Independent StudyDirected research and reading125:0025:00N/A
Scheduled Learning And Teaching ActivitiesSmall group teaching31:003:00N/A
Guided Independent StudyIndependent study125:0025:00N/A
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

Description Length Semester When Set Percentage Comment
Written Examination1202A100Unseen
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.

Reading Lists