CALIFORNIA STATE UNIVERSITY, SACRAMENTO
DEPARTMENT OF ECONOMICS
Public Economics and Regulation
Econ 170
Fall 2015, M 5:30-8:20 p.m.
Mariposa Hall, Room 1001
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Instructor
Dr. J. T. Kelly
Office: Benicia Hell, Room 1011
E-mail: t.kelly@saclink.csus.edu
Telephone: 916-278-3576 (during office hours only)
Office Hours: MW 2:15-2:45 PM, M 4:30-5:00 or by appt.
II.
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Course Objectives
An examination of government regulation of industry in the North American context:
transportation, communication, energy, and other industries. Topics include deregulation,
public ownership, pricing, and investment. Basic economics tools, technical issues and policy
choices related to government regulation and control of markets will be evaluated in a public
economics context with respect to market structures, supply and demand, economic surplus,
costs and benefits, and impacts. Past and current theories of economic regulation are applied in
a variety of references to real regulations and case studies. The attentive student should be able
to use the information gained to evaluate potential regulations, legislative proposals and events
in a realistic, knowledgeable economics framework.
Required Textbook
Market Regulation, Roger Sherman (Pearson 2008) ≤$269. Available in Hornet Bookstore and online.
Online Student Companion Site (free) is highly recommended, but not
required. (http://wps.aw.com/aw_sherman_marketreg_1/73/18766/4804276.cw/index.html)
Course Grade
Pop Quizzes, H o me w o r k , C l a s s p a r t i c i p a t i o n : 10%
2 Mid-Term Exams: 25% each
Final Exam: 20%
Weekly Journal: 20%
EXTRA CREDIT: One Extracurricular Field Trip – student-proposed and instructor-approved in
advance, with validation of visit and a Trip Report – to regulatory events, sites, museums, etc. The
later the field trips are approved and taken, the lower the credit. Value: up to 3 points on the course
grade (e.g., enough to go from a B+ to A-, C- to C, etc.).
Course Assignments
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A Comprehensive Regulatory Economics Journal – a collection of weekly 2-3-page
entries, kept current, containing what you see in the news as related to what we are
currently covering in class about regulation and economics. For full credit, each wellwritten entry will combine 1) regulation, 2) economics, 3) current events from the world in
which we live and 4) your own thinking and analysis. Handwritten is acceptable, if easily
legible. Please use insert binders rather than notebooks and use front sides of paper only.
Journal entries (12) will be numbered and oldest first. Bring your journals to every class:
they will be collected, reviewed and graded at irregular intervals. There will be no
catchups; they must be kept current to receive max credit. Your Journal, including a
Comprehensive Overview of no more than 3 pages, is due by November 16.
Review Questions/ Homework is to be completed the day the chapter is to be discussed.
Additional readings, as assigned, plus handouts in class
Lecture slides provided on the course Blackboard site
Testing
Exams – The mid-term exams and final exam will likely contain True/False and multiple choice, but
emphasis will be on short discussion (True/False/Depends and explain your answer) and/or essays.
Although the mid-term exams focus on the material just previously covered, they and the final exam
are cumulative in the sense that the materials covered build on all that has gone before. Questions
will require that students know the applicable economic principles/theory and be able to explain and
apply them.
Pop Quizzes –may or may not be announced prior to their occurrence; only those that show up for
class will know for sure. If you miss a quiz or a chance to turn in your homework, that opportunity is
forever gone: there are no “makeups.”
Grading
Letter Grade
A
AB+
B
BC+
C
CD+
D
F
Percentage
91.5-100%
89.5-91.4%
88.5-89.4%
81-88.4%
79.5-80.4%
78.5-79.4%
71.5-78.4%
69.5-71.4%
68.5-69.4%
59.5-68.4%
0-59.4%
Performance
Excellent Work
Nearly Excellent Work
Very Good Work
Good Work
Mostly Good Work
Above Average Work
Average Work
Mostly Average Work
Below Average Work
Poor Work
Failing Work
In the classroom
The nature of the course will be face-to-face lecture, augmented with occasional PowerPoint slides and
whiteboard explanations.
Announcements —
Announcements will usually be made during lectures, but sometimes also sent by email using Blackboard. Be
sure your email on file with the University is correct and that your inbox is not full.
Responsibilities —
I will come to class well prepared; respond to and encourage questions and other appropriate class participation;
grade your quizzes, exams, extra credit and any other assignments fairly and in as timely a fashion as possible;
be available during office hours and for scheduled appointments; let you know as soon as any changes are made
to the schedule, course or class meetings; and do my best to stimulate your appreciation, interest and enthusiasm
for economics.
I expect you to read the syllabus thoroughly and understand the ground rules; attend and actively participate in
lectures; complete all the assigned readings and other assignments in a timely manner; ask questions when you
are lost or confused; ask questions even if you fear they might be “dumb” or that you’re the only one who
doesn’t get a point (believe me, you are not alone); seriously think about the material and study for and complete
all review and homework assignments, quizzes, midterms and a comprehensive final examination. I also expect
that you will refrain from asking me to make special exceptions to the requirements laid out in this syllabus just
for you.
Caveat emptor –
Economics is a discipline that is built up cumulatively, brick by brick, so is not a subject that you should let slide
until the last minute, fall behind on readings or fail to ask questions as soon as you realize you don’t understand
something. Ask classmates, an economics student assistant or me. If you have to miss a class, be sure to check
with your fellow classmates, to see what material you missed; I recommend finding at least one “study buddy” or
join a study group to facilitate information flow for exams or in case of an absence. Forming study groups is also
a good way to learn the material. Even if you are the best student in the group, you will still learn through your
efforts to explain the material to others. If at any point during the semester you are having difficulty, PLEASE
come see me sooner rather than later. If you do keep up with the material, most of you can do well in the course.
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Preliminary Schedule
I reserve the right to alter the schedule as necessary
Week
Date
2
3
9/7
9/14
4,5
9/21-28
6,7
10/5-12
8
10/19
9
10/26
10,11,
12
Material Covered
Introductions, Housekeeping,
Assignments
Why regulate? Why economics?
Brief review of economics tools for
regulation
Campus closed – no class
Review of tools, cont.
Market regulation
8/31
1
Reading
Prof/
Chapter
11/2-16
13
14
11/23
11/30
15
16
12/7
12/14
Review/
Homework
Questions
Extra
Reading
TBA
Prof
Prof
Prof
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Competition as market regulator
2
Problems relying on competition
The modern firm and market
structures
3
2,3,5-8
1,2a-c,4,5a,69
1-3
4,5
TBA
Antitrust evolution
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Industry regulation
Midterm Exam #1
Pricing principles
Review Midterm #2
Regulatory institutions
10
Energy
17
11
12
Electric Power
Applications
Mid-term exam #2
Review Midterm #2
Applications, cont.
Applications, cont.
Final Comprehensive Exam @5:15
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TBA
Key Dates
Oct 19
Nov 23
Monday
Monday
– 1st Mid-term exam
– 2nd Midterm exam
Assignments, exams and readings
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Assignments must be completed as and when assigned. “The dog ate my computer” and other problems
are not an excuse for missing assignments.
Review/homework questions are tailored to the textbook to help you better understand the chapter
material, but they may or may not be collected on any given day. No late homework will be accepted. I
typically work through some of the chapter questions during or after lectures so that you can check your
understanding. Similar questions may be asked on the exams, but many exam questions will focus on
applying that basic knowledge to evaluate more complex issues.
I will occasionally examine and discuss articles appearing in the media, so it may pay you to pay attention
to such material. At the very least, it should give you grist for your mandatory Journal.
I typically – but not always – take roll near the beginning of the lecture, or after the nightly break, so
punctuality and persistence matter.
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Give yourself ample time to complete assignments. These readings and other assignments are challenging
and important both for your homework grade and your performance in the class. I encourage you to spend
time working through them carefully and to seek out help when you encounter problems.
Please ask me questions if you do not understand a part of the lecture or the readings. And please ask
your questions either in class or during office hours. I believe that it is particularly important that you ask
your questions during the class so that other students will be able to learn from them, too. You may fear
that you are the only one lost and that your questions will betray ignorance, but nothing could be farther
from the truth: many, if not most, students will have the same questions but hope that they will figure it
out somehow on their own. Also, the moment may pass and you’ll forget the question or the material
itself. Thus it is important not to give in to the temptation to hold the question until class is just over,
when everyone else and I will be departing for the next class and the next class and professor will be
coming in.
Pop quizzes will be given approximately three or four times per month, typically at the beginning of class.
They usually contain a few true/false, one short discussion question or problem concerning either the
previous lecture or an assignment made for that week, or perhaps some multiple choice as well.
Exams are closed book and given in class. Exams typically are comprised of written essay responses,
true/false and multiple-choice questions, requiring a large Blue Book and Scantron 882-E form. Please use
a pen on the front side of each page for the written Blue Book answers and a No. 2 pencil for the T/F-MC
answers on Scantrons.
All exam dates are already scheduled. As there are no make-up exams, these dates are known so that you
can arrange to be here for them.
If your grades are high enough, such as “A”s and “A+”s, you may be able to exempt the final exam.
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Policies
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As a student in this course (and at this university) you are expected to maintain high degrees of
professionalism, commitment to active learning and participation in this class and also integrity in your
behavior in and out of the classroom. Academic honesty is expected. Students suspected of cheating
may be ejected from the class, failed and/or reported to Judicial Affairs.
Attendance is both expected and highly recommended. Come to class on time; you will not be given
extra time if you are late for a pop quiz or an exam. There will be no makeup quizzes or examinations.
Exam dates are given in the course outline. This is to avoid any potential conflicts.
If you decide to withdraw from this class, make sure you do so with the registrar. If you withdraw
without permission, you will be assigned a failing grade. Once a student submits work for a grade,
he/she will not assigned a grade of “WU” under any circumstances. Keep mobile devices off during
class, including laptops. If you wish to use your laptop during class, please come speak with me. You
may not use your phone/MP3 player as a calculator on exams. You may use a calculator without
programming capabilities.
I will be available by phone during office hours, so if you have questions and cannot get to my office
then, please phone them in. remember, though, I already may have students in the office.
A person with a documented illness for missing a midterm exam will have the weight of his/her
midterm added to their final exam, so that their final exam will be 45% of the grade. Failure to provide
the required documentation within one week from the date of the exam will result to a grade of zero for
the exam.
If you have a learning disability or a physical disability that requires accommodation, please let me
know as soon as possible. It is the student’s responsibility to provide documentation of disability to the
Office of Services to Students with Disabilities (SSWD) and meet with a SSWD counselor to request
special accommodation before classes start. SSWD is located in Lassen Hall 1008 and can be contacted
by phone at (916) 278-6955 (Voice) (916) 278-7239 (TDD only) or via email at sswd@csus.edu.
All needs that have been verified through the Services to Students with Disabilities (Lassen Hall) will
be accommodated.
Life lessons
If you find that you have any trouble keeping up with assignments or other aspects of the course, make
sure you let me know as early as possible. As you will find in life, building rapport and effective
relationships are key to becoming an effective professional. Make sure that you are proactive in
informing your instructors when difficulties arise during the semester so that they can help you find a
solution.
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Understand when you can drop this course
It is the student’s responsibility to understand when they need to consider dis-enrolling from a course.
Refer to the Sac State Course Schedule for dates and deadlines for registration. After this period, a
serious and compelling reason is required to drop from the course. Serious and compelling reasons
includes: (1) documented and significant change in work hours, leaving student unable to attend class, or
(2) documented and severe physical/mental illness/injury to the student or student’s family.
Additional Assignable Readings
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21.
Kahn, Alfred E., The Economics of Regulation, MIT, 1995 (6 th printing), or any other edition. A copy
will be placed on 2-hour Reserve.
"Bell South Launches Fastest Web Service Among Phone Firms," Wall Street Journal, November 17,
2005. http://www.prism.gatech.edu/~mm284/Fast.doc
Borenstein, Rapid Price Communication and Coordination: The Airline Tariff Publishing Case,@ in
The Antitrust Revolution: Competition and Policy, Kwoka and White, editors, 4th edition, Oxford
University Press, 2004. http://www.prism.gatech.edu/~mm284/ATP.pdf
Borenstein, The Evolution of US Airline Competition,@ JEP, Spring 1992.
http://www.prism.gatech.edu/~mm284/Borenstein1992.pdf
Broken System? Tweak It, They Say,@ NYT, July 28, 2002.
http://www.prism.gatech.edu/~mm284/Broken.htm
"Cable Wins Internet-Access Ruling," New York Times, June 28, 2005.
Christie, Harris and Schultz, “Why Did NASDAQ Market Makers Stop Avoiding Odd-Eighth Quotes?”
Journal of Finance v49, n5 (December 1994): 1813-40. electronic copy available through jstor.org
with saclink account
Crandall and Whinston, "Does Antitrust Policy Improve Consumer Welfare? Assessing the Evidence."
Journal Of Economic Perspectives, Fall 2003.
http://www.prism.gatech.edu/~mm284/CrandallWinston.pdf
"FCC Eases High-Speed Access Rules," New York Times, August 6, 2005.
http://www.prism.gatech.edu/~mm284/Article2.doc
"For U.S. Consumers, Broadband Service is Slow and Expensive,"Wall Street Journal, November 16,
2005. http://www.prism.gatech.edu/~mm284/Slow.doc
"In Risky Move, A New AT&T Bets on Internet Technology," Wall Street Journal, November 21, 2005.
http://www.prism.gatech.edu/~mm284/Makeover.doc
Kovacic and Shapiro, "Antitrust Policy: A Century of Economic and Legal
Thinking,@ Journal of Economic Perspectives, Winter 2000.
http://faculty.haas.berkeley.edu/shapiro/century.pdf
Dalkier and Warren-Boulton, A Prices, Market Definition, and the Effects of
Merger: Staples-Office Depot,@ in The Antitrust Revolution.
http://www.prism.gatech.edu/~mm284/Staples.pdf
Motta, Competition Policy: Theory and Practice, Cambridge University Press, 2004, selected chapters.
http://books.google.com/books?vid=ISBN0521016916&id=_gLD41DfaJwC&pg=PA1&lpg=PA1&dq=
motta+competition+policy&sig=Nab-iWgdEjT9OGm53DAxc-lfbNE
"New Rules on Net Service May Hurt Some Providers," New York Times, August 6, 2005.
http://www.prism.gatech.edu/~mm284/Article3.doc
Porter and Zona, "Bidding, Bid Rigging and School Milk Prices," in The Antitrust Revolution.
http://www.prism.gatech.edu/~mm284/Milk.pdf
Publisher Mergers: A Consumer-Based Approach to Antitrust Analysis, Information Access
Alliance, June, 2003. White Paper. http://www.informationaccess.org/WhitePaperV2Final.pdf
“Report From FERC Suggests Collusion by Williams, AES,” Wall Street Journal, November 15, 2002.
http://www.prism.gatech.edu/~mm284/Article1.doc
Supplementary Resources
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Baumol, William J. and Blinder, Alan S., Microeconomics: Principles and Policy, any e, Harcourt
College Publishers, 2000+.
Boardman, Anthony E., Greenberg, David H., Vining, Aidan R. and Weimer, David L., CostBenefit Analysis: Concepts and Practice, 4e, Prentice Hall, Inc.
McAvoy, Paul W., Energy Policy: An Economic Analysis, W. W. Norton & Co., Inc., 1983.
Yergin, Daniel, The Prize, Simon and Schuster, 1991.
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Microeconomics Review Topics
Fall 2015
Opportunity Cost
Marginal Analysis
Supply & Demand
Demand & elasticity
Supply & elasticity
Equilibrium
Price controls
Welfare – consumer and producer surplus
Benefits from Trade
Income and substitution effects
Theory of the Firm
Market structure
Perfect competition
Monopoly
Economic efficiency
Monopoly regulation, pricing
Market power, cartels
Roles of Government
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