Learning objectives
After this course, the student is able to:
• Apply and present law & economics theories of regulation to institutional and practical regulatory problems;
• Use, synthesise and structure knowledge and understanding of economic and social regulation;
• Advise governments or regulatory authorities on the implications of particular principles, institutions, or forms of regulation;
• Critically assess regulatory proposals or decisions by participants in regulatory processes.
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After the privatisation, liberalisation and deregulation of regulated sectors in developed market economies, independent regulatory institutions were setup to deal with situations of permanent market power. Such market power is particularly prevalent in network industries as electricity, gas, the water industries, telecommunication, and transport. The pipes, wires, rails, or cables are not easily duplicated and may give rise to what economic texts call ‘a natural monopoly’. Further, the products and services of those sectors are generally seen as essential to society. Regulators are given the task to control such industries, and if possible, to restructure them into competitive market structures so that they will optimally serve their customers.
Since there are various alternatives to regulation, several questions arise. What are the alternatives available to regulation, and how can we account for legal regulation as the chosen form of governance? What do economic theories suggest on the principles of optimal regulation of decisions on pricing, investments, quantities, or quality in the fields of energy, telecom or water and what are the legal forms we find in practice? What is the regulatory meaning of economic concepts such as marginal, incremental, average cost pricing, and Ramsey pricing, and what legal counterparts do we actually find in the network sectors? What are the benefits and drawbacks of practical forms of regulation such as rate-of-return regulation and price-cap regulation, and are hybrid forms perhaps optimal in practice? Particularly complex are regulatory policies on the restructuring of the industries and the vertical or horizontal separation of the incumbent operators of an industry. Is it better for the performance of an industry to integrate or separate the network from providing services over the network? And if separation is desirable, what are the principles and practices of providing access and interconnection of competing networks or providers? By combining legal and economic insights on these issues it becomes possible to both understand the actual legal forms we find in practice and to suggest alternatives that may better serve society.
When discussing these theories, principles, and practices, the course will built on experiences from several jurisdictions, in particular from EU member states and from the USA, but also from practices in developing countries and transitional economies. Students will be made aware that specific regulatory experiences and a changing context of regulation give rise to a range of new and challenging policy questions.
Format
Lectures, seminars, student presentations. The lectures and seminars will in particular be used to help mastering the more technical issues. Student presentations will build on own research and research reporting of actual and practical regulation issues.
Assessment method
Written closed-book exam (75%, individual)
Presentation and participation (25%, individual)
In case online access is required for this course and you are not in the position to buy the access code, you are advised to contact the course coordinator for an alternative solution. Please note that access codes are not re-usable meaning that codes from second hand books do not work, as well as access codes from books with a different ISBN number. Separate or spare codes are usually not available.
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