4.55 out of 5
4.55
91 reviews on Udemy

Introduction to the economics of public services regulation

A smooth introduction to the complex theory and practice of the regulation of public services
Instructor:
Antonio Estache
286 students enrolled
English [Auto-generated]
Understand WHY key essential public services need some regulatory supervision
Learn HOW to think through the regulatory needs as an economist
Have a good sense of HOW to regulate WHAT and WHEN
Learn the core dimensions of the basic ECONOMIC TOOLS of regulation as they are used in the real world when regulation is taken seriously by the authorities

This course focuses on how best to regulate (public or private) firms responsible for the delivery of what are commonly viewed as public services in the context in which the service providers enjoy significant market power. The lectures get into both the theory and the practice of regulation. The main illustrations of the concepts are from the infrastructure industries (airports, energy, rail, roads, ports, telecoms, water and sanitation). These sectors represent investments and maintenance expenditures of 5-20% of GDP (depending on the level of development of the country) and are major contributors to the growth capacity of countries and of their competitiveness. . They also represent a very large share of the required spending of every household. The poorer the household, often, the higher the share it needs to spend on these public services. Finally, because of the high amounts invested in the sector and the large size of many of the projects required, these services are quite exposed to corruption risks. This is why these services are so politically sensitive and why governments, non-governmental organization and other stakeholders spend a lot of energy debating how best to regulate them.. By the end of the class, you will see that the key issues you’ll learn are representative of many of the trade-offs covered in the ongoing policy debates and you should be able to develop your own view on what desirable regulatory policies and institutions should be in public services, and probably more generally.

Setting the stages

1
Overview
2
The definition and the context of regulation
3
A quick reminder of the basic theory on monopolies
4
A first look at the regulation on monopolies
5
How to assess the size of the problem a regulator faces?
6
Stéphane Saussier - About deadweight loss
7
On the diversity and evolution of the theory of regulation
8
Module 1

- The definition, and the evolution of regulation theory and practice
- A reminder of the basic theory on monopolies
- How to assess the size of the problem a regulator faces?

Insights on monopolies to set up their regulation

1
Overview
2
Getting progressively closer to real life
3
The game of regulation
4
Jose-Antonio Gomez-Ibanez - About the regulatory game
5
Some math to get some useful rules of thumbs
6
Math Insight : Deriving the Lerner index (or Inverse elasticity rule)
7
How to start thinking about the design of regulation in details?
8
Module 2

- The relevance of information and institutional distortions

- Regulation as a game

- Some useful rules of thumbs

Regulating monopolies with and without information gaps

1
Overview
2
Brief reminder of key concepts
3
David Martimort - About agency theories

What are some main changes in the design of regulation brought about by the uise of agency models?

4
Optimal regulation under full information
5
Optimal regulation when regulators are uncertain about costs
6
Phil Burns - About regulatory practice

What are the practical aspects of how regulation has evolved to minimize the consequences of the asymmetry of information between the utility regulator and the companies it regulates?

7
Why imperfect costs information makes regulation imperfect?
8
A first look at regulation in practice
9
Math Insight : Computing the Rate of Return (RoR)
10
Impact of information asymmetry on optimal regulatory choice
11
Math Insight : The drivers of regulatory options
12
Module 3

- Designing regulation with and without transparent information

- On the impact of information asymmetries

- On the optimal choice of instruments under information asymmetries

Designing a regulation matching the institutional capacity of a country/sector

1
Overview
2
What if the government or regulator is not benevolent?
3
Tina Soreide - About corruption

How big of a problem is corruption in the context of regulation of public services and what are its main consequences in practice?

4
What to do in case of non-benevolence?
5
Francesc Trillas - About regulatory institutions

What do we know about the importance and effectiveness of the independence of regulatory agencies?

6
Limited regulatory/Technical capacity
7
Limited commitment capacity
8
Limited accountability
9
Limited fiscal capacity
10
Summing up and comparing optimal solutions
11
Module 4

- What happens when the government/regulator is NOT benevolent
- The various sources of non-benevolence 
- What to do in case of non-benevolence

An insight into the real world practice regulation

1
Overview
2
Moving from theory to practice
3
Putting real numbers on concpets
4
The key formula in the regulation of public service operators
5
Richard Schlirf - About the finances of regulation

How is financial modeling used in practice in regulated industries?

6
Financial modeling and the coherence of regulation
7
Module 5

- From theory to practice

- The key formulas in applied regulation and their use

- The relevance of the finance dimensions of regulation 

Details on pricing techniques

1
Overview
2
Policy trade-offs and pricing techniques choices
3
Claude Crampes - About price discrimination

How does price discrimination work in practice?

4
Pricing in practice
5
First-degree price discrimination
6
Second-degree price discrimination
7
Math Insight : Two-part tariffs
8
Math Insight : Pricing in segmentable markets (1) - Energy
9
Third-degree price discrimination
10
Math Insight : Pricing in segmentable markets (2) - The rules of Thumb
11
Final comments on pricing techniques
12
Module 6

- From theory to practice

- The key formulas in applied regulation and their use

- The relevance of the finance dimensions of regulation

Pricing when regulators care about more than costs and price discrimination

1
Overview
2
Pricing access to networks ton interconnected firms
3
Tommaso Valletti - About consumer losses from pricing

How are the consumers be penalised by the use of price discrimination techniques in telecoms?

4
Dealing with social concerns in regulation
5
Dealing with quality in regulation
6
Math Insight : Regulating quality
7
Dealing with multiple dimensions of quality in regulation
8
Institutional constraints on the regulation of quality
9
Fitting quality into the allowed regulated average price
10
Module 7

- The relevance of networks dimensions

- The concerns for quality

- The social concerns

Regulation in the context of the privatization of public services

1
Overview
2
Jose-Luis Guasch - About renegociation

How big of a problem is contract renegociation?

3
About the link between regulation and privatization
4
Emmanuelle Auriol - About public vs private financing

What does theory tell us about the optimal distribution, between the public and the private sector, of the responsability for financing public services?

5
About the promises of the privatization
6
About how regulation fits into project finance in practice
7
About how regulation could fit into project finance in practice
8
About the futur of public-private partnerships and their regulation
9
Module 8

- Regulation and privatization

- Project finance

- Regulation in the context of project finance

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