The module is named “Public Enterprise and Regulation.” I have attached the information needed for this task. 4 previous papers (Each has 5 questions, and you pick 2). 1000 each so 2000 words total. The colour-coded ones have similar themes which are highly to appear in the task needed. If you have knowledge of these terms and concepts, please contact me and we could speak further.
Public Enterprise and regulation
· This exam paper contains five questions.
· Answer two questions only.
· Please write your answer to each question in separate documents, note on the coversheet the question number you have answered and submit your answer to the correct submission link.
· The word limit for each question is 1,000 words. Equations are not included in the word count for this assessment.
· All questions are worth equal marks.
· You should allow a minimum of 30 minutes to upload/submit your work.
Answer two questions only.
The word limit for each question is 1,000 words.
1. Outline the different public and private theories of regulation and their theoretical predictions. Using relevant examples, explain which of the theories you think best fits with reality.
2. The theory of contestable markets seems to offer substantial benefits in terms of preventing abuse of monopoly power without the need for regulation or actual competition. Can these benefits be realised in practice? Your answer should draw on both theory and empirical examples.
3. Explain the role of competition for the market in bringing about desirable outcomes in markets where competition in the market is not desirable or possible. Can it work, and in what circumstances? Your answer should draw on both theory and empirical examples.
4. Can privatisation, combined with market opening and / or strong economic regulation, solve the problems associated with state ownership? Do you agree that state ownership is a problem in need of a solution or that more state ownership is now needed to solve the problems of private ownership? Your answer should draw on both theory and empirical examples.
5. How can economic regulation be used to ensure a “fair” balance between incentivising firms to improve efficiency and make a reasonable return, whilst also delivering a good deal for tax payers and consumers? Are some regulatory mechanisms more suited than others to achieving these objectives? Your answer should draw on both theory and empirical examples.
6. Explain the motivation for adopting “high powered” regulatory incentive mechanisms such as RPI-X as compared to more traditional rate-of-return regulation approaches to economic regulation of private monopolists. Was RPI-X the right choice for the UK and does it remain fit for purpose? You should draw on both theory and empirical examples.
“What is owned by everyone is perceived to be owned by no-one”
(Parker and Saal, 2003).
Do you agree that state ownership is a fundamentally flawed ownership model for which privatisation, combined with associated regulatory and market opening reforms is the best solution? Justify your answer by reference to both theory and relevant empirical cases.
8. Based on evaluation of the theory and evidence from the US and the UK, do you believe that economic regulators exist to service the interests of the public, private interest groups or even themselves?
9. Explain the theoretical benefits of ‘ex ante competition’ (also referred to as ‘competition for the market’) as compared to the alternatives of economic regulation or ‘competition in the market’. What are the potential pitfalls of ex ante competition, and what are the factors that are critical to its success? Your answer should refer to empirical examples.
10. Do any markets come close enough to meeting the assumptions of the theory of contestable markets to warrant policy makers designing reforms based on this theory? Discuss your answer based on theory and evidence.
11. Outline the assumptions and predictions of the theory of contestable markets. How far does contestability guarantee good outcomes for consumers without the need for actual competition or regulation? Justify your answer by reference to both theory and relevant empirical cases
12. Evaluate the available public and private interest theories of regulation, explaining their assumptions and theoretical predictions, and discussing their relative strengths from a theoretical perspective. Making reference to empirical examples, which theory do you think is mist accurate in explaining actual regulatory practice
13. What are the relative merits of RPI-X regulation as compared to the rate of return (1 word..) that has typically applied in the US? Has RPI-X regulation been a success in the UK and if so who have been the winners (or losers)?
14. What do the different theoretical contributions predict about the likely impact of privatization on productive efficiency? Discuss the evidence on the success of privatization internationally, taking into account of the impact of associated restructuring regulatory reform and market opening that is often implemented simultaneously
15. Explain the concept and theoretical benefits of ‘ex ante competition’ (also referred to as ‘competition for the market’) as compared to regulation or ‘competition in the market’. Assess whether competition for the market been a successful policy internationally, and what factors are critical to its success or failure. Your answer should refer to specific empirical examples.
16. To what extent does economic theory predict that privatization will lead to greater productive efficiency compared with state-owned enterprises? How far does the empirical evidence show that privatization on its own, or combined with institutional reforms and market opening, delivers such efficiency gains in practice?
17. Discuss the relative advantages and disadvantages of RPI-X regulation as compared with rate of return regulation. Taking into account of the impact on efficiency, prices and also distributive justice, do you think RPI-X regulation has been a success in the UK? How do you see regulatory policy evolving in the future?
18. Define natural monopoly … To what extent is ‘ex ante competition’ (also referred to as ‘competition for the market’) a preferred policy tool for dealing with natural monopoly compared with either regulation or ‘competition in the market’? Your answer should consider both theory and empirical evidence.
19. Describe the assumptions and predictions of public and private interests theories of regulation. Explain which theory you consider to be most theoretically (1 word..). Which do you think best explains actual regulatory practice in Europe and the US?
20. Outline the underlying assumptions and predictions of the theory of contestable markets. Does the theory have any relevance for policy makers? Justify your answer by reference to relevant empirical cases
You will see (from past papers) that the common theme of the questions is that each invites a discussion of theory and then how the theory fits with the evidence.
Lecture 1: Introduction, Public Enterprise definition, rationale, history
Lecture 2: Public Enterprise failure and privatisation effects: theory
Lecture 3: Natural monopoly and competition (or not)?
Lecture 4: The theory of contestable markets
Lecture 5: Competition for the market: rationale, theory, evidence
Lecture 6: Theories of regulation: rationale for regulation
Lecture 7: Incentive regulation: RPI-X versus ROR regulation
Lecture 8: Efficiency analysis and menu regulation
Lecture 9: Regulatory challenges and future directions
Lecture 10: The impact of privatisation: the evidence
Lecture 11: A middle way and module conclusions
Seminar 1: Contestability
Seminar 2: Competition for the market
Seminar 3: The social impact of reforms
Seminar 4: Revision class
Lecture 1: background – no specific exam question on this.
Lecture 2 and 10 (see e.g. Q4 on the 2019 paper) – Note that Q1 on the 2015 paper was more about PPPs (Lecture 11) – there is less emphasis now on PPPs so PPPs will not be explicitly examined but you could refer to it as an alternative between public and private in a question about the impact of ownership.
Lecture 3: relevant for questions about contestability and franchising (how to get competition to work in natural monopoly); and also for regulation questions. Some questions could in principle start with “Define natural monopoly” and then go on to ask about some aspect of regulation / competition. See for example: Q3 on the 2018 paper.
Lecture 4 and Seminar 1: see for example Q1 on the 2019 paper
Lecture 5 and Seminar 2: see for example Q5 on the 2019 paper
Lecture 6: see for example Q2 on the 2019 paper
Lectures 7 to 9: questions like Q3 on the 2019 paper (also linked to Seminar 3 on social impact of reforms). Note that there is also some material in Lecture 11 on the future / recent regulatory developments
Lecture 11: partly a concluding lecture. Includes also PFI/PPP work. This provides evidence to include in a question such as question 4 on the 2019 paper. PPPs will no longer be a separate question
Tips for a good grade:
Short introduction (paragraph) – why is the question interesting / relevant / topical from a policy perspective – keep things brief though
Theory and evidence needed. May start with theory and then look at evidence or discuss the two parts together – but make sure you link the two in a meaningful way
Maintain flow of the argument throughout the answer – try not just to list facts but try and link each paragraph so that it is clear that you are telling a story not just writing down everything you know
Try to be exact with definitions (typical errors including mixing up MC and AC).Use diagrams where appropriate
Make sure you conclude and in doing so directly answer the question in this conclusion in some way – even if it is to say that the evidence is mixed. I am happy for you to give your view if it is backed up by supporting theoretical / empirical material