Monopoly, Competition and Public Policy (350-CN-66)
Instructors
James Andrew Hornsten
847/491-8220
I'm a microeconomist interested in intellectual property, clever pricing schemes, corporate boards of directors, regulatory issues, and the myriad ways businesses compete for customers. I commute year-round from Skokie on a folding bike and always wear my helmet (while biking). Technically, I've worked as a professional actor, mover, dance instructor, book reviewer, custodian, and screen printer (but my experience in each is VERY limited). As a Northwestern graduate student, I camped out for tickets and saw the Wildcats play in the 1996 Rose Bowl. In the next year, I aspire to try a lot of new restaurants, bicycle 3000 miles, finish some dated (but still unopened) computer games, learn to juggle, watch the Vikings win the Super Bowl, and eat properly-made s'mores around a campfire while watching a good meteor shower on a clear night out in the boondocks with my wife and two sons.
Meeting Info
University Hall 101: Thurs 6:15PM - 9:15PM
Overview of class
This course focuses on a particular market failure - monopoly - in the context of antitrust law, public utility regulation, network effects, and intellectual property. First, profit-seeking firms may try to reduce competition through price discrimination, resale price maintenance, entry deterrence, predation, horizontal mergers, vertical integration, or collusion. We will use economic theory and landmark legal cases to study the purpose and development of antitrust law, which is meant to reduce the adverse effects of anti-competitive business practices. Next, large fixed costs of building and maintaining a physical network may generate natural monopolies in markets for electric power, cable television, natural gas, and water. We will explore the challenges regulators face when they attempt to apply market controls such as price caps so an essential service remains affordable. We will also ponder the proper role of government in today's digital economy, which features a number of winner-take-all markets, in which bandwagon effects result in convergence to a single operating system, recording technology, or social network. Finally, society might be willing to trade short-term welfare loss for long-term gains by granting temporary monopolies (e.g., patents or copyrights) to provide an incentive to innovate. We will analyze the ideal scope of artificial monopoly rights and the natural tension between intellectual property and antitrust law. Throughout the course we will explore the general topic of regulation and industry cases, both current and historical.
Registration Requirements
Prerequisites: ECON 281-CN, 310-A, 310-B.