COURSE SYLLABUS
Course
Coordinator
Course Code
Credit
Semester
Prerequisite Course
Course Description
Learning Outcome (LO) MK
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Regulatory Economics
Dr. Ir. M. Parulian Hutagaol, MSc.
EKO 415
3 (3-0)
Odd
Microeconomics 1 (EKO 201) and Macroeconomics 1 (EKO 203)
This course is designed to equip students with knowledge on various regulatory economic aspects, consisting of the
definition and scopes of regulatory economics, the basic theories needed for market efficiency analysis, the reasons for
regulation implementation in certain industries, the alternative instrument of regulation, the obstacles to enter the
market such as pricing, merger and vertical restrictions, the evaluation of the welfare effect of regulation in natural
monopoly, competitive market, environment and rice industry, the impact assessment method of regulation,
deregulation and the legal basis of market competition regulation in Indonesia.
: After completing this course, students are expected to be able to explain the theories that become the basis of economic
regulations, using RIA analysis method in analyzing the impact of regulation implementation, and explain the legal basis of
market competition regulation in Indonesia; in addition, students can think critically, communicate well orally and
in writing, and work independently as well as manage time punctually.
No.
1
2
Learning Outcome (Basic
Competency)
Students can explain and
understand the meanings
of economic regulations,
regulatory instrument and
the monitoring process
Students understand the
concept of economic
efficiency and inefficiency
occurring in market
mechanism and can
estimate welfare loss due
Teaching Material
a.
b.
c.
a.
b.
Introduction to Economic
regulations:
The definition of industrial
regulations
Regulatory instrument
Monitoring process
Market Competition,
Technical Progress, and
Economic Efficiency:
Perfect Competition
Market model
Monopoly and Deadweight
Learning
Method
Time
Lecture
r
Reference
Assessment
Criteria
Lecture and
Discussion
3 x 60 ‘
MPH
CW (1, 10)
- relevant
questions/comm
ents stated by
students
Lecture and
Discussion
3 x 60 ‘
MPH
CW (4)
Written/oral quiz
and relevant
questions/comment
s stated by students
1
to monopoly market
3
4
Students can explain and
implement S-C-P approach
in industrial organization
analysis and its
relationship with antitrust
economy; and understand
the logical reasons behind
the theory of alternatives
on regulatory economics
and limitation
Students understand
natural monopoly
companies, the reasons
behind those company
regulations, and the
alternative methods to
monitor. Students can also
understand how
technological progress can
eliminate natural
monopoly
5
Students can explain
Loss
c. X-inefficiency
d. Waste produced by
monopoly
e. Welfare loss estimation
due to monopoly
a. Introduction to Antitrust:
- Industrial organization
analysis
- Antitrust
b. The theory of Economic
Regulations:
- Public interest theory)
- Capture theory)
- The theory of regulatory
economics
Natural monopoly
regulation:
a. The dilemma of natural
monopoly
b. Sunk cost effect on market
competition
c. Natural monopoly with
sunk cost and government
intervention
d. Government ownership on
natural monopoly
companies
e. Alternative methods to
monitor private natural
monopoly companies
f. The role of technological
progress in eliminating
natural monopoly
Merger
Lecture and
Discussion
3 x 60 ‘
MPH
CW (3)
CW (24)
VVH (10)
Written/oral quiz or
assignment (take
home) and relevant
questions/comment
s stated by students
Lecture and
Discussion
3 x 60 ‘
MPH
JES (8)
VVH (9)
Written/oral quiz
and relevant
questions/comment
s stated by students
Lecture and
3 x 60 ‘
MF
CW (22)
Written/oral quiz or
2
merger shapes, logical
reasons and economic
motives that underlie
company’s merger,
horizontally and vertically,
and the impacts on market
competition
6
Students can explain
various types of vertical
restrictions, logical
reasons and economic
motives that underlie the
practice
7.
Students understand
competitive market
practice and its effects,
directly or indirectly, on
economic welfare
8
Students are expected to
understand competitive
market practice and its
effects, directly or
indirectly, on economic
welfare
a. Definition and types
b. The reasons for merger
c. Horizontal merger
horizontal and its impacts
on market competition
d. B/C of horizontal merger
e. Vertical merger and its
advantages
f. Anti-competition effect of
the vertical merger
Vertical Restrictions:
a. Definition and types
b. Resale price maintenance)
c. Maximum resale price)
d. Minimum resale price)
e. Territorial Restrictions
f. Exclusive dealing
g. Tying
Competitive Market
Regulation: Part 1
a. Introductory Notes
b. Competitive model
c. Direct effects of price and
entry/exit regulations
d. Closing Notes
a.
b.
c.
d.
e.
Competitive Market
Regulation: Part 2
Introductory Notes
Cournot model
Assessment of direct
effects of price and
entry/exit regulations
Some caveats
Assessment of indirect
Discussion
VVH (8)
assignment (take
home) and relevant
questions/comment
s stated by students
Lecture and
Discussion
3 x 60 ‘
MF
CW (22)
VVH (8)
Written/oral quiz
and relevant
questions/comment
s stated by students
Lecture and
Discussion
3 x 60 ‘
YLP
VVH (16)
Written/oral quiz or
assignment (take
home) and relevant
questions/comment
s stated by students
MID-TES/UTS (40%)
Lecture and
3 x 60 ‘
Discussion
YLP
VVH (16)
Written/oral quiz
and relevant
questions/comment
s stated by students
3
f.
9
Students can explain
alternative approaches in
controlling environmental
degradation
a.
b.
c.
d.
e.
10
Students can explain the
rice industry regulations in
Indonesia, including the
reasons behind them, the
types regulatory
instrument, and the
welfare effects of
regulations
a.
b.
c.
d.
e.
f.
effects of price and entry
regulations
Assessment of direct
effects of price and exit
regulations
Environmental
Regulations:
The role and functions of
environment
Pollution as
environmental problem
Root of the problem
Theoretical approach to
control pollution (Pigovian
approach and Coasian
approach)
Government regulation to
control pollution
(Command and control
regulation and marketbased regulation)
Government Regulations
in the Rice Industry in
Indonesia:
Brief background on the
regulation in the rice
industry
Reasons to pursue rice
self-sufficiency
Rice industry regulatory
instrument
Export-import regulation
Floor price regulation
Ceiling price regulation
Lecture and
Discussion
3 x 60 ‘
MF
CT (1)
MFP (20)
JES (9)
Written/oral quiz or
assignment (take
home) and relevant
questions/comment
s stated by students
Lecture and
Discussion
3 x 60 ‘
YLP
will be
provided
Written/oral quiz
and relevant
questions/comment
s stated by students
4
11
Students can understand
and implement the right
method to control
regulation quality and RIA
method application stages
12
Students understand the
factors that underlie the
demand on deregulation
and deregulation
alternative policy of public
sector; and students can
explain the legal basis of
market competition
regulation in Indonesia
g. Government Purchasing
Price (HPP)
h. Input price regulation
i. Discussion on the welfare
effects of rice price and
input regulations
Regulatory Impact
Assessment (RIA):
a. Factors considered
important for investment
b. RIA as policy instrument
for regulation quality
management
c. The advantages of using
RIA methods
d. The three elements of
good government
regulatory system
e. The basic principle of
regulatory review
f. RIA method application
stages
a. Deregulation:
- Deregulation?
- Industrial deregulation in
Indonesia
- Factors that underlie the
demand on deregulation
- Deregulation alternative
policy of public sector
Lecture and
Discussion
3 x 60 ‘
YLP
ADB
Written/oral quiz or
assignment (take
home) and relevant
questions/comment
s stated by students
Lecture and
Discussion
3 x 60 ‘
MF
MFP (19)
Act No.5/1999
Written/oral quiz
and relevant
questions/comment
s stated by students
b. Market Competition
Regulation in Indonesia:
Review on Act No.5/1999
- Basic Principle
5
13
and
14
Students can think
critically, communicate
well orally and in
writing, work
independently as well as
manage time punctually
Act objectives
Illegal per se approach
Approach reason principle
Horizontal restrictions
Vertical restrictions
Contract and activity
prohibition
Dominant company
criteria
- Analysis and conduct
critical review on the
applicable economic
regulation
Making paper
(assigned since
the third lecture)
and Presentation
MPH/M
F/YLP
-
Analytical ability
Oral and written
communication
ability
Cooperation
ability and
participation
Management
ability
FINAL TEST/UAS (40%)
ASSIGNMENT (20%)
Reference:
1.
2.
3.
4.
5.
6.
Church, Jeffrey and Roger Ware. 2000. Industrial Organization: A Strategic Approach. Singapore: McGraw Hill. (CW)
Viscusi, W.Kip, John M. Vernon, and Joseph E. Harrington, Jr. 1995. Economics of Regulation and Antitrust. Massachusetts, USA: The MIT Press. (VVH)
Asian Development Bank.2003. Indonesian Regulatory Review Manual: The Promotion of Deregulation and Competition Project. (ADB)
Stiglitz, Joseph E. 2000. “Economics of the Public Sector”. New York: W.W. Norton and Company. (JES)
Callan, Scott J. and Thomas, Janet M. 2000. ‘Environmental Economics and Management: Theory, Policy and Application’. Orlando Flo,USA: The Dryden
Press. (CT)
McTaggart, Douglas and Findlay, Christopher, and Parkin, Michael. 1996. ‘Economics’. Sydney: Addison-Wesley Publishing Company. (MFP)
Lecturer Team:
1. Dr. Ir. M. Parulian Hutagaol , MSc. (MPH) as coordinator
2. Dr. Moch. Findi (MF) as member of lecturer team
6
3. Dr. Ir. Yeti Lis Purnamadewi, MSc. Agr (YLP) as member of lecturer team
Assignment Design
: One group paper with topic related to course material, each group consisting of 4-5 students;
Assessment Format
: Exams and Assignment
Mid-test (UTS)
Final test (UAS)
Assignment (paper) and Presentation
: 40 %
: 40 %
: 20 %
7