讲义教程讲稿1

1、Lecture 10 : RevisionEconomics of RegulationP13428 Economics of Regulation10. RevisionEconomics of RegulationRevision roadmap:GuidelinesTips for better answersSample Exam question on Section BSummary of Student Performance on ModuleLecture 10 : RevisionEconomics of RegulationRevision guidelines:When

2、 and why some behaviour is petitiveCompetition policy in practice and in theoryNatural monopoly problemUnderstand differences between different solutionsBaron-Myerson modelLecture 10 : RevisionRead each question carefully.Choose to answer only those questions that you fully understand.Do not reprodu

3、ce prepared essays without regard to what the question asks.Write a brief action planThe plan should help you to structure the essay and help you to use the material you know.Tips to improve answer qualityPreparation before the answer.Lecture 10 : RevisionEconomics of RegulationShould have a clear s

4、tructure, use your analysis skills.The Introduction should help the reader (the marker) to go through your work.The Main Body of argument should follow, with evidence, examples, etc., used to support your statements.A (brief) Conclusion should end the essay.Your answerLecture 10 : RevisionEconomics

5、of RegulationDefine technical terms as you introduce them, especially any such terms that are specified in the question.Use examples whenever possible to support arguments.You can get additional credit for example/evidence that goes beyond lecture notes.Use equations, graphs, figures, etc where rele

6、vant, and be sure that they help to clarify your argument.Good practiceLecture 10 : RevisionEconomics of RegulationExplain diagrams and figures.Label graph axes, etc.Equations/figures that are just reproduced without explanations do not improve answers.There is no need to do a list of references, bu

7、t citing principal authors is useful, e.g. “ Demsetz (1968) shows”More good practiceLecture 10 : RevisionEconomics of RegulationReproducing bullet points does not constitute an acceptable answers (0%-20% marks), even if the points are relevantTry to write a coherent explanationIf you really run out

8、of time on the last question, brief notes indicating how the answer should have developed may get some credit (0%-40%).But try to use your time wisely!Bullet point answersLecture 10 : RevisionEconomics of RegulationWhere contradictory arguments exist, it may be useful to indicate their respective st

9、rengths.Use example from your own experience only if they do not require too much explanationPersonal opinions are fine, but cover the received views first. Opinions may be best left to the conclusion.Final considerationsLecture 10 : RevisionEconomics of RegulationQuestion:How can regulators e infor

10、mation asymmetries and provide incentives for efficiency when regulating privately owned natural monopolies?Sample Exam question on Section B- first part of the question on information asymmetries answers should specifically refer to the model developed in lectures- second part of the question need

11、to draw on material from a number of topicsLecture 10 : RevisionEconomics of RegulationExample of Essay PlanIntroductionPossible origins of asymmetric information in regulatory setting Problems caused by asymmetric informationBaron-Myerson modelIncentives for efficiency within other regulatory solut

12、ionsConclusionLecture 10 : RevisionEconomics of RegulationIntroductionWill briefly outline how the essay will be structuredIndicates its main lines of reasoningLecture 10 : RevisionEconomics of RegulationPossible origins of asymmetric information in regulatory settingRegulated firms possess better i

13、nformation on their costs than the regulatory authorityreasonable? why?Managers of the regulated firm unwilling to disclose valuable information to authorityLecture 10 : RevisionEconomics of RegulationProblems caused by asymmetric informationConsider direct regulation (e.g. rate-of-return or price-c

14、ap), by not disclosing true costs can be granted higher profits.Franchise bidding, can try to renegotiate terms of the franchiseManagers of public enterprises may be rewarded for meeting performance requirements.Lecture 10 : RevisionEconomics of RegulationBaron-Myerson modelAssumptionsPoor mechanism

15、 designed by regulatory authorityPooling equilibrium (welfare implications)Better mechanism and separating equilibrium (welfare)Both explicit solution of the model and explanation of the reasoning behind pooling and separating equilibria are okLecture 10 : RevisionEconomics of RegulationIncentives f

16、or efficiency within other regulatory solutionsRegulation AverchJohnson eff., cost/quality incentives in RPIXfranchise bidding ex post incentives to deliverinternal incentives under nationalisation.Lecture 10 : RevisionEconomics of RegulationConclusionsIt is unrealistic to assume that regulator has

17、same information of regulated firm, creating incentive to lie on the part of managersIt may be possible to design an incentive scheme where more efficient firms are paid to reveal their costs, improve on welfare, still redistribution problem.Nonetheless, also in perfect information context it is dif

18、ficult to solve natural monopoly problem without creating distortive incentives.Lecture 10 : RevisionEconomics of RegulationSummary of Student Performance on ModuleStud.sAvgSDMinMax1stsII-1sII-2sIIIsFails9060.29.5237713.3%56.7%21.1%4.4%4.4%Economics of RegulationLecture 10 : RevisionEconomics of Reg

19、ulationQ1: Describe the cost conditions necessary for the existence of a natural monopoly. Is it ever possible for governments to achieve ideal pricing in natural monopoly markets? Q2: Using real-world examples compare the effectiveness of regulation and franchise bidding in delivering allocative ef

20、ficiency and service quality.Sample Exam question on Section BSection B: Natural Monopoly / 3 solutions / asymmetric informationLecture 10 : RevisionSample Exam question on Section BEconomics of RegulationQuestion 1 answer hints:- important not to miss the point, i.e. should discuss first-best prici

21、ng, not second-best e. Do not confuse monopoly with natural monopoly!- the first part of the question should present discussion of economies of scale, but also sub-additivity (possible in at least one of these settings: temporary versus permanent natural monopolies, natural duopolies, and multi-prod

22、uct natural monopolies).- In the second part you should identify that ideal pricing involves negative profits / subsidies or nationalisation.- ideal pricing may e feasible in contestable markets, some example also in the textbook.- privatised natural monopolies might perform better under regulation

23、than under subsidised nationalisation, efficiency gains from privatisation outweigh the deadweight loss caused by moving from socially optimal to profit maximising production.Lecture 10 : RevisionSample Exam question on Section BEconomics of RegulationQuestion 2 answer hints:- important to focus on allocative efficiency and quality