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Competition and Economical Regulation

Code 12417
Year 1
Semester S1
ECTS Credits 6
Workload OT(15H)/TP(30H)
Scientific area Economics
Entry requirements Microeconomics, Game Theory and Industrial Economics.
Mode of delivery The teaching method is face-to-face, with lectures both theoretical and practical. Accordingly, students are invited to interact with the teacher and with colleagues in the resolution of the proposed exercises. The degree of commitment to these exercises will be taken into consideration in the final evaluation.
Work placements Not applicable
Learning outcomes The curricular unit (CU) has as main objectives:
- To realize the pertinence of public intervention in markets via competition policy and regulation;
- To understand the regulation issues of a natural monopolies and network industries;
- To analyze the utilities regulation;
- To identify into the markets the need of antitrust policies and to apply regulation measures.
At the end of the CU the student should be able to understand the need of public intervention, both from competition
and regulation approaches. Students acquire both competition and regulation tools to analyze and intervene in real
market situations. The student will be able to comprehend the role of regulatory authorities
Syllabus 1 - Public intervention in a market economy
1.1 Market failures
1.2 Government failures
1.3 Applications
2 - Competition and antitrust policy
2.1 Competitive markets
2.2 Horizontal concentration and vertical integration and market power
2.3 Market power and antitrust
2.4 Antitrust Law
2.5 The market definition and dominant position
3 - Economic regulation
3.1 Principles of Economic Regulation
3.2 The regulatory process
3.3 Regulation authorities
3.4 Theory of regulation
3.5 Capture theory
3.6 Theory of interest groups
3.7 Network industries and access regulation
4 - Natural monopoly regulation
4.1 Regulation of State-Owned Firms
4.2 Franchise bidding
4.3 Cost – of – service regulation
4.4 Rate – of – return regulation
4.5 The Averch – Johnson Model
4.6 Incentive regulation
4.7 Price – caps
4.8 Rate of Return vs Price-Cap
5 - Utilities pricing
5.1 Marginal Cost Pricing
5.2 Ramsey – Boiteux Pricing
5.3 Applications
Main Bibliography Recommended textbook

A - Viscusi, W. K. , Vernon, J. and Harrington, J. (2005). “Economics of Regulation and Antitrust”, 4th ed., MIT Press

Other suitable books for the course

B - Motta, M. (2004). Competition Policy: theory and practice, Cambridge University Press.

B - Church, J. and Ware, R. (2000), Industrial Organization: a strategic approach, McGraw-Hill

B - Newberry, D. (2002). Privatization, Restructuring and Regulation of Network Utilities, MIT Press

B - Armstrong, M. and Sappington, D. E.M. (2007). "Recent Developments in the Theory of Regulation," Handbook of Industrial Organization, Elsevier
Teaching Methodologies and Assessment Criteria The teaching method is face-to-face, consisting both of theoretical and practical classes, as well as on tutorials
classes. The bibliography supports each one of the issues of the syllabus. The teacher proposes exercises to solve
and case studies to discuss. Alongside the technical analysis of the issues, the debate about alternative regulatory
policies is pursued. With close monitoring, the student performs, discloses and discusses a research paper. Learning
activities include regular office hours, by appointment and by email. For the continuous assessment the weighted
average is applied as follows: (i) assessment test, weighted 0.5; (ii) "research paper weighted 0.4; and (iii) quality of
involvement in the discussions with weighting 0.1. A final grade of less than 6 val on the continuous assessment, or
instead plagiarism practices, imply the exclusion of the exam.
Language Portuguese. Tutorial support is available in English.
Last updated on: 2020-01-16

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