Economics 382
Topics in Public Policy
toward Industry

Spring 2000
Th 1:30-4
HRM 311

R. N. Langlois


Syllabus and Reading List

Although the title suggests that this is a “topics” course, I intend it in fact to be a relatively thorough survey of the economics of antitrust and regulation. It is a companion to Economic 381, which is the theory course, so we will not explore all the avenues of modern Industrial Organization theory. We will, however, treat theory extensively at a common-sense and policy-relevant level.  Indeed, I expect to talk mostly about theory and history; you will bring in law and policy in your assignments.

Course Requirements.

The requirements for the course will be two major papers. a “where are we?” paper and a case study paper.

        The “where are we?” paper will be an attempt to capture the current state of economic theory and antitrust policy on a particular issue.  Issues might include predatory pricing, resale price maintenance, exclusive dealing, tying arrangements, etc.  Issues in intellectual property rights and regulation are also fair game.  The idea would be to survey

(a)    what economists have said on the issue in order to arrive at an understanding of the current state-of-the art, including ongoing controversies and

(b)   where matters stand on the issue from the point of view of legal precedent and the policy of the relevant antitrust or regulatory agencies. 

        The case study paper will look at a particular antitrust case (either ongoing or historical) or an particular legal, legislative, or policy issue in intellectual property rights or regulation.  It is possible, but not necessarily desirable, to pick the same issue for the case study as for the theory/policy paper.

In order to avoid the dreaded incomplete, you need to get me final drafts of both papers in time for me to grade them before the deadline for late grades.  Let’s say on the first day of final exams.

Reading Materials.

There is no text that covers the material the way this course will cover it.  We will rely mostly on journal articles, which is in any case the usual way of doing things in a graduate course.  Nonetheless, I have indicated some readings in Viscusi, Vernon, and Harrington, Economics of Regulation and Antitrust.  Cambridge: MIT Press, 1995, second edition.  It is better on regulation than antitrust, and we will rely on it more toward the end of the course.  It will be on reserve.  I have assigned almost all the chapters from Thomas M. Jorde and David J. Teece, eds., Antitrust, Innovation, and Competitiveness. New York: Oxford University Press, 1992.  You may consider buying a copy, although this too will be on reserve.  I will also refer a lot to a couple of somewhat old but still useful paperbacks: Richard A. Posner, Antitrust Law: An Economic Perspective. Chicago: University of Chicago Press, 1976, and Robert H. Bork, The Antitrust Paradox: A Policy at War with Itself. Basic Books, 1978 (new edition 1995).  They will be on reserve, but you might want to have your own copies.

NOTE: The online version of the syllabus will be updated periodically throughout the semester. It includes as many links to online versions of articles as I can find.  Articles in the American Economic Review, Journal of Political Economy, Journal of Economic Literature, and Journal of Economic Perspectives, and the Quarterly Journal of Economics more than five years old are available online at JStor, which requires that you either access the link through the UConn domain or use something called a proxy server.  (The computer center has online information about the latter.)

Those of you who prefer paper copies can find journal articles in the bound-periodicals stacks on the third floor of the library. They are thus effectively on reserve. Etiquette demands that you reshelf journals immediately after you use them so that others can find them. Many journals are also available in 339; same etiquette applies..


In addition to the published references below, here are some websites that may be of interest for the course and your papers.


Sequence of Topics

1. Antitrust and monopoly.

1.1. Competition and monopoly: theory.

1.1.1. Neoclassical theory and the SCP paradigm.

1.1.2. Chicago and after.

1.1.3. Dynamic and Schumpeterian approaches.

1.1.4. Barriers to entry.

1.1.5. Standards and network effects.

 


1.2. Antitrust policy: history.


1.3. Issues in antitrust policy.

1.3.1. Collusion and oligopoly.

1.3.2. Mergers and market definition.

1.3.3. Predatory pricing and price discrimination.

1.3.4. Vertical antitrust policy: general considerations.

1.3.5. Tying and leveraging.

1.3.6. Exclusive dealing and boycotts.

1.3.7. Resale price maintenance.


1.4. Criticisms and reform of antitrust.

1.4.1. Antitrust, innovation, and dynamic competition.

1.4.2. Antitrust and rent-seeking behavior.

1.4.3. Modern antitrust enforcement.


2. Innovation and intellectual property rights.


3. Economic Regulation.

3.1. Regulation in history.

3.2. Regulation in theory.

3.3. “Natural monopoly” and rate regulation.

3.4. Franchise bidding.

         Viscusi, et al., chapter 13.

3.5. Multiproduct monopolies.

         Viscusi, et al., chapter 15.

3.6 Deregulation.

         Paul Joskow, “Introducing Competition in Network Industries: From Hierarchies to Markets in Electricity,” Industrial and Corporate Change 5(2): 341-82 (1996).

         Paul Joskow, “Restructuring, Competition and Regulatory Reform in the U.S. Electricity Sector,” Journal of Economic Perspectives 11(3): 119-138 (Summer 1997).

         Matt White, “Power Struggles: Explaining Deregulatory Reforms in Electricity Markets,” Brookings Papers on Economic Activity: Microeconomics (1996), pages 201-250.

         Vernon Smith, “Regulatory Reform in the Electric Power Industry,” Regulation 19(1) (1996).

         Robert W. Crandall, “Halfway Home:  U.S. Telecommunications (De)Regulation in the 1970s and 1980s,” in Jack C. High, ed., Regulation:  Economic Theory and History. Ann Arbor: University of Michigan Press, 1991.  (On reserve.)

         Lawrence J. White, “The Deregulation of the Telephone Industry: The Lessons from the U.S. Railroad Deregulation Experience,” Working Paper #CLB-98-016 Center for Law and Business, New York University, February 1999.