This course familiarizes students with some aspects of modern economic regulation theory and competition in regulated sectors, using tools from industrial organization, game theory and information economics.
It aims at presenting a selection of standard models on regulation and competition, review some concepts of industrial organization and contract theory, and introduce a number of topical research questions for specific sectors.
Students will discuss recent papers as part of the reading group “Applied Economic Theory”. +
Students will have to read, summarize and discuss papers in the reading group. They will be asked to check some proofs in detail. This preparation will require some work.
Before enrolling all non-CentER students should ask permission to the Director of Graduate Studies in Economics. Please send your request for permission to CentER Graduate School at firstname.lastname@example.org.
A solid background in micro-economics, such as Micro-economics 1, 2 and 3 in the CentER Research Master Economics year 1 program
Principles of economic regulation / Adverse selection (ca. 4 lectures)
Review of standard adverse selection models and a number of extensions (commitment, multi-dimensional types, multiple tasks). Practical implementation.
Reading Group Applied Economic Theory (ca. 2 lectures)
In this part students will present and discuss a number of recent papers. This part of the course will be attended by faculty members (PhD-students and senior academics) with an interest in economic theory.
Capita selecta Market Design / Competition in Regulated Sectors (ca. 2 lectures)
The content of this part might be adjusted from year to year. In the past we have looked at followin issues.
- Multi-unit auctions / Strategic substitutes and complements / Commitment
Review of Cournot model (equilibrium, Kreps and Scheinkman), first and second-mover advantages, incentives of firms to commit future actions, Supply function equilibria, the effect of financial markets on product market competition
- Competition on a regulated network / Ramsey Pricing
Review of Ramsey pricing, one-way and two-way access pricing in the telecommunications sector, competitive effects of transmission rights in electricity sector
- Security of supply in the electricity market / Capacity Markets
Balancing market power and security of supply, designing capacity markets, short and long term effects, discussion on role of government.
- Platform competition / Network effects
Review of network effects, canonical models of two-sided markets, implications for competition policy, empirics.
Type of instructions
Reading group / Lectures
Type of exams
Oral final exam (80%) and preparation for reading groups (20%)