crc  .  syllabi collection  .  alumni syllabi  .  economics  .

   Course Title    Microeconomic Policy and Business Regulation
Lecturer    Natalya Shelkova
Institution    Irkutsk State Academy of Economics
Country    Russia


Course description

The course is developed in order to bring understanding of rationale for economic policy-making at the microeconomic level. Why and when government intervene into the private sector activities? What are the means of such intervention? This knowledge is crucial for the achievement of socially desirable state of economy, efficient use of public resources, as well as for thoughtful citizens participation in the economic policy-making.

 

Objectives

  1. Get acquainted with the theoretical framework of microeconomic policy formation and business regulation.
  2. Understand the rationale for government intervention in the private sector. Have knowledge of means for such intervention.
  3. Critically evaluate contemporary policy debates in the area of microeconomic policy and regulation with the reference to economic theory.
  4. Apply cost-benefit analysis to microeconomic policy and regulation proposals.
  5. Extend students' knowledge of the subject by independent studies of current economic policies in Russia.

 

Recommended Texts

R. Pindyck, D.Rubinfeld. Microeconomics. 4th ed. Prentice Hall.

S.I. Cohen. Microeconomic Policy. Routledge, 2001.

W. K. K. Viscusi, J.E. Harrington, J. M. Vernon. Economics of Regulation and Antitrust. MIT Press, 2000.

N. Acocella. The Foundations of Economic Policy. Cambridge University Press, 2000.

J.E. Stiglitz. Economics of the Public Sector. 3rd ed. W.W. Norton & Company, 2000.

 

Course Content

Fundamentals

A. Course overview: microeconomic policy and regulation

B. Microeconomic review. Fundamentals of welfare economics. ( Market efficiency. Overview of Market failure. Efficiency and equity).

 

II. Microeconomic policy

  1. 1.Market failures, their outcomes and policies towards them.
  2. Indivisibility, competition policy and technology policy.
  3. Uncertainty, incomplete information, incomplete markets.
  4. Externalities, industrial policy and environmental policy.
  5. Collectivities, social provision and insurance.
  6. Distribution of income policy.
  7. Social Choice and Cost-Benefit Analysis. Incidence for Cost-Benefit analysis for micro policy-making and regulation.

 

III. Regulation: goals, history, theory and practice

  1. Overview. Economic and antitrust regulation. Instruments of economic regulation. Regulation of potentially competitive markets.
  2. Examples in regulation: regulation of monopoly, externalities and environment.
  3. Deregulation and regulatory reform.

 

Course requirements and assessment

Students are expected to attend each class, since part of their performance will be assessed based on class participation. Class participation will constitute 15% of the final grade. In order to perform well in class students are expected to read the articles assigned (see Reading list).

Every week there will be assigned a problem set to be completed at home. Problem sets will constitute 15% of the final grade.

There will be 3 tests that are supposed to reflect students' understanding of the material after each section of the course. Tests' results will constitute 35% of the final grade.

There will be an individual term paper. Topic of the term paper should be chosen and discussed with the instructor after the 2nd week of classes. The paper topic should cover current issues in microeconomic policy and regulation in the country and the research should be mainly based on recent newspapers' and magazines' articles. The paper should be submitted 2 weeks prior the end of semester and constitutes 35% of the final grade.

 

Instructional Methodology

The course will emphasize development of analytical, quantitative, as well as qualitative skills important for policy-making. Along with traditional lectures there will be case studies discussions.

Students are also asked to write short briefs on the basis of their research of articles published in newspapers and magazines, Internet on the current economic events in Russia and worldwide that will be summarized in the term paper.

 

Course Readings

Fundamentals

A. Course overview: microeconomic policy and regulation.

Required reading

Charles L. Schultze. The Role and Responsibilities of the Economist. American Ecnomic Review. 1972. Volume 72, Issue 2. Pp.62-66.

Jan Svenjnar. Microeconomic Issues in the Transition to a Market Economy. The Journal of Economic Perspectives. 1991. Volume 5, Issue 4. Pp. 123-138.

Optional reading

Donald Wittman. Why Democracies Produce Efficient Results. The Journal of Political Economy. 1989. Volume 97, Issue 6. Pp. 1395-1424.

Karl W. Kapp. Economic Regulation and Economic Planning. The American Economic Review. 1939. Volume 29, Issue 4. Pp.760-773.

B. Microeconomic review. Fundamentals of welfare economics.

Required reading

R. Pindyck, D.Rubinfeld. Microeconomics. Chapters 1-12. (If you have strong microeconomic background, just scan the chapters to restore your knowledge).

J.E. Stiglitz. Economics of the Public Sector. Chapters 3-6.

Optional reading

William S. Brown. Market Failure in the New Economy. Journal of Economic Issues. 2000. Volume XXIV, #1. Pp.219-227.

Alan T. Peacock, Charles K. Rowley. Pareto Optimality and the Political Economy of Liberalism. The Journal of Political Economy

 

II. Microeconomic policy

A. Market failures, their outcomes and policies towards them.

  1. Indivisibility, competition policy and technology policy.
  2. Uncertainty, incomplete information, incomplete markets.
  3. Externalities, industrial policy and environmental policy.
  4. Collectivities, social provision and insurance.
  5. Distribution of income policy.

Required reading

S. I. Cohen. Microeconomic Policy. Chapters 3-7.

Optional reading

(A) Francis M. Bator. The Anatomy of Market Failure. Quarterly Journal of Economics. Volume 72, Issue 3. (1958). Pp. 351-379.

(D, E) S.E. Holtermann. Externalities and Public Goods. Economica. Volume 39, Issue 153. (1972). Pp.78-87.

(C, D) Bruce C. Greenwald, Joseph E. Stiglitz. Externalities in Economies with Imperfect Information and Incomplete Markets. Quarterly Journal of Economics. Volume 101, Issue 2. (1986). Pp.229-264.

(E) Richard Cornes, Todd Sandler. Easy Riders, Joint Production, and Public Goods. The Economic Journal. Volume 94. No. 375. (1984). Pp. 580-598.

(B ) Raymond Vernon. Competition Policy Towards Multinational Corporations. The American Economic Review. Volume 64, Issue 2. (1974). Pp. 276-282.

(D) R. D. Norton. Industrial Policy and American Renewal. Journal of Economic Literature. Vol. 24. No. 1. (1986). Pp. 1-40.

(All) F. Thomas Juster. Allocating Resources for Policy Research. The Use of Surveys for Policy Research. The American Economic Review. Vol. 64. No. 2. (1974). Pp.355-364.

G. Social Choice and Cost-Benefit Analysis.

Required reading

J. Stiglitz. Economics of the Public Sector. Chapter 11.

E. Stokey, R.Zeckhauser. A Primer for Policy Analysis. Chapter 9.

Optional reading

Ann F. Friedlaender. The Social Costs of Regulating the Railroads. The American Economic Review. Volume 61, Issue 2. (1971). Pp.226-234.

Jerry A. Hausman, Paul L. Joskow Evaluating Costs and Benefits of Applying Efficiency Standards. The American Economic Review. Volume 72, No. 2. (1982). Pp. 220-225.

 

III. Regulation: goals, history, theory and practice

Overview. Economic Regulation.

Required reading

W. K. K. Viscusi, J.E. Harrington, J. M. Vernon. Chapters 1,2, 10,16.

Optional reading

Richard K. Anderson, Carl E. Enomoto. Product Quality and Price Regulation: A General Equilibrium Analysis. Economica. New Series. Volume 53, No. 209. (1986). Pp. 87-95.

G. Examples in regulation: regulation of monopoly, externalities and environment.

Required reading

J. Stiglitz. Economics of the Public Sector. Chapters 8-9.

W. K. K. Viscusi, J.E. Harrington, J. M. Vernon. Chapters 9, 11, 21.

Optional reading

Keith Cowling, Dennis C. Mueller. The Social Cost of Monopoly Power. The Economic Journal. Volume 88, Issue 352. (1978). Pp.727-748.

H. Deregulation and Regulatory Reform.

Optional reading

John Vickers, George Yarrow. Economic Perspectives on Privatization. Journal of Economic Perspectives. Volume 5, Issue 2. Pp.111-132.

Jonathan Haskel, Stefan Szymanski. Privatization, Liberalization, Wages and Employment: Theory and Evidence for the UK. Economica. New Series. Volume 60, Issue 238. (1993). Pp.161-181.

Farid Dhanji. Post-Communist Economic Transformation: Hungary vs. Poland. Transformation Programs: Content and Sequencing. The American Economic Review. Volume 81, No. 2. (1991). Pp.323-328.



   crc  .  syllabi collection  .  alumni syllabi  .  economics  .