The course will deal with the theory and practice of economic regulation of infrastructure.  It will cover the main regulatory tools and issues and have a strong policy content.  The theoretical component will cover the rationale for economic regulation, the choice of regulatory or other intervention, efficient cost recovery and pricing and other key economic concepts, tools and institutions for effective implementation.   There will be a component covering reform and governance of public utilities highlighting the different considerations when regulating public versus private entities as well as the economics of privatisation or corporatisation of public enterprises and relevant aspects of competition policy. There will also be a component covering circumstances in developing countries.  There will also be a component on institutional arrangements and regulatory performance. The main regulatory and reform issues will be covered with case studies for several sectors, including: power, water, airports and telecommunications.   There will also be a component covering some controversial issues in economic regulation in particular: the valuation of the regulatory asset base, the appropriate cost of capital and community service obligations.  There are important policy issues to be considered for each of these aspects. There will be practical material in the form of several case studies.  The case studies will illustrate the application of economic principles in the theoretical components as well as the effectiveness of institutional arrangements.

On successful completion of this course, students should:

 (a)    Understand key issues and problems with respect to regulation, governance and policies for the infrastructure sector

 (b)    Understand and be able to apply key principles, concepts and tools relevant to the economic regulation of infrastructure industries

 (c)     Be able to analyse different government policies for regulation and reform of the infrastructure sector.

 (d)    Be able to explain the rationale for addressing economic regulation issues.

 (i)    Homework problem sets - 10 per cent. 

 (ii)   An essay of 3-4,000 words - 20 per cent

 (iii)  In-class presentation of essay - 10 per cent

 (iii)  Final exam - 60 per cent.

2 hours lecture and 1 hour tutorial per week, 6 hours reading, research and problem solving

A basic ability to understand and apply economic concepts is assumed.  Graduate-level microeconomics is recommended.

An undergraduate-level course on microeconomics or equivalent.

The main references for this course are:

Baldwin, R., M. Cave and M. Lodge (2010), The Oxford Handbook of Regulation, Oxford University Press.

Gómes-Ibañez, J. (2003) Regulating Infrastructure: Monopoly, Contracts, and Discretion, Harvard University Press.

World Bank (2006), Handbook for Evaluating Infrastructure Regulatory Systems.

Viscusi, W. K., J. M. Vernon and J. E. Harrington (2005), Economics of Regulation and Antitrust. MIT.

Case study material from various regulatory websites will be provided closer to the start date for the course.The main references for this course are:

Baldwin, R., M. Cave and M. Lodge (2010), The Oxford Handbook of Regulation, Oxford University Press.

Gómes-Ibañez, J. (2003) Regulating Infrastructure: Monopoly, Contracts, and Discretion, Harvard University Press.

World Bank (2006), Handbook for Evaluating Infrastructure Regulatory Systems.

Viscusi, W. K., J. M. Vernon and J. E. Harrington (2005), Economics of Regulation and Antitrust. MIT.

Case study material from various regulatory websites will be provided closer to the start date for the course.