ECON 224

Regulation and Antitrust: 

Government and the Market


(subject to some changes to readings)


Spring 2018

Course Information


Firms and the public sector interact via regulation and antitrust. Firms use (or fail to use) the regulatory process for competitive advantage, and agencies and legislators use (or misuse) regulation to accomplish their policy objectives. Topics covered in this course include the analysis of market power, predation and discrimination, mergers, regulation of infrastructure industries, and health and safety regulation. Case studies include railroads; telephone, cable, and broadband; the energy industry; differences between the EU and United States in merger reviews; and cybersecurity.


Wesleyan University is committed to ensuring that all qualified students with disabilities are afforded an equal opportunity to participate in and benefit from its programs and services. To receive accommodations, a student must have a documented disability as defined by Section 504 of the Rehabilitation Act of 1973 and the ADA Amendments Act of 2008, and provide documentation of the disability. Since accommodations may require early planning and generally are not provided retroactively, please contact Accessibility Services as soon as possible. If you believe that you need accommodations for a disability, please contact Dean Patey in Accessibility Services (, located in North College, Room 021, or call 860/685-5581 for an appointment to discuss your needs and the process for requesting accommodations. 


Students must have a course in introductory economics, such as AP Microeconomics, ECON 101, or ECON 110. Please see me regarding any questions or concerns.

Requirements and Grading

1. Problem Sets (20%, lowest 2 will be dropped)

2. Midterm Exam (20%)

3. Congressional Hearings (25%)

4. Final Exam, including take-home response to the Congressional Hearings (35%)

5. Preparation and participation. Students are expected to read required readings and to participate in class discussions. (an adjustment to the average of the above, re-averaged with above and weighted at 10%)

Grading Scale

I use the Hogie Scale, which gives a 0, 1, 2 (the "hurdle" level), 3, 4 (minor problems), or 5 for each question or category of evaluation. To find your letter grade equivalent, divide by the number of questions/categories to get your average score on the 0-5 scale. Then convert according to: 4.5=A, 4.0=A-, 3.7=B+, 3.3=B, 3.0=B-, 2.7=C+. 2.3=C, 2.0=C-. For problem sets and the Congressional Hearings, grades are check plus, check, or check minus. Sometimes an intermediate grade of check vertical bar is inserted between check plus and check. These grades convert to the 5 point scale as follows: check plus → 4.7, check vertical bar → 4.35,  check → 4.0, 1 → 3.3.

Class Participation 

Please ask a lot of questions. Your questions are likely to generate positive externalities since more likely than not, your peers have the same questions that you do. Your class participation adjustment is equal to the weighted average of your other grades (on the 5 point scale) plus or minus up to 1 point. The positive point would come from generating positive externalities through helpful discussion. Negative points would come from distracting other students by using a phone or computer for things other than taking notes.

Congressional Hearings

In the Congressional hearings, you will be assigned one of 3 roles: researcher, speaker, or responder. As a researcher, you must prepare a 1-2 page position paper prior to the hearing. As a speaker, you must speak and answer questions during the hearing. As a responder, you must correct and improve your team’s statements and responses during the hearing, and your response is due one week later.

Meeting Time and Place

MW 2:50-4:10pm, PAC 002 (the best classroom in all of Wesleyan).

Clinic and Teaching Assistant

Stephen McCarthy (samccarthy) will offer a clinic Sunday evenings, 7-9pm in PAC 004.

Office Hours

Formal office hours are M T W Th 1:05 – 2:20, although my door is generally open when I'm in. A call or email before you walk over is a good idea. 

Course Outline

Filled circle readings and assignments are required.

Open circle readings are strictly optional background.

They are included to provide a starting point should you 

be interested in pursuing that topic in greater depth.

I. Basic Tools

1/29 M 

1. Introduction and Key Terms

○ Hantke-Domas, M. (2003). The Public Interest Theory of Regulation: Non-Existence or Misinterpretation? European Journal of Law and Economics, 15(2), 165–194.

○ CODAGNONE, Cristiano (2017) “Lobbying as Rhetorical Framing in the ‘Sharing Economy’: a Case Study on the Limits and Crisis of the Evidence Based Policy Paradigm,” DigiWorld Economic Journal. 4th Quarter, Issue 108, 15-43.

1/31 W

2. Organization of Firms and Government

Roger Sherman (2008) Market Regulation, Pearson, Chapter 1 “Introduction to Market Regulation.”

Dorman P. (2014) “Firms,” Chapter 8 in Microeconomics: A Fresh Start, Springer.

W. Kip Viscusi, Joseph E. Harrington, Jr., John M. Vernon (2005) Economics of Regulation and Antitrust, MIT Press, 2005, Chapter 2.

2/5 M

3. Cost Curves and Economies of Scale

Dorman, P. (2014). “Production Costs and the Theory of Supply,” Chapter 12 in Microeconomics: A Fresh Start, Springer, 249–274.

○ Miller, R. A. (2001). "Firms' cost functions: A reconstruction." Review of Industrial Organization, 18(2), 183-200.

○ Emek Basker (2007), "The Causes and Consequences of Wal-Mart's Growth," Journal of Economic Perspectives, Summer.

○ Alfred Chandler (1990) "Scale, Scope, and Organizational Capabilities," Chapter 2 in Scale and Scope: the Dyanimics of Industrial Capitalism, Harvard University Press.

Problem Set 1 due. Answers 

2/7 W

4. Monopoly

Dorman, P. (2014). “Monopoly Power,” Chapter 13 in Microeconomics: A Fresh Start, Springer, 275–295.

Frischmann, B. M., & Hogendorn, C. (2015). "Retrospectives: The Marginal Cost Controversy." Journal of Economic Perspectives, 193-205.

2/12 M

Class Cancelled

2/14 W

5. Externalities

Pindyck and Rubinfeld, "Externalities and Public Goods," Chapter 18 in Microeconomics, especially pp. 641-665.

Problem Set 2 due. Answers 

6. The Principal-Agent Problem and Firm Boundaries

II. Antitrust

2/19 M

7. Market Structure, Oligopoly, and Collusion

W. Shepherd and J. Shepherd, Chapter 3 in The Economics of Industrial Organization, Waveland Press.

Problem Set 3 due. Answers

2/21 W

8. Antitrust Laws

Massimo Motta (2004), "Competition Policy: History, Objectives, and the Law," Chapter 1 in Competition Policy: Theory and Practice, Cambridge, 2004. (especially first part)

"Big Tech’s Nemesis" Economist, 26 Feb. 2018

○ Dennis Carlton and Randal Picker, "Antitrust and Regulation," Working Paper, 2006, introduction and sections I and II.

2/26 M

9. Horizontal Antitrust Cases

Patrick DeGraba and Gregory Rosston (2014) "The Proposed Merger of AT&T and T-Mobile: Rethinking Possible (2011)," Case 1 in John Kwoka and Lawrence White, eds., The Antitrust Revolution, 6th edition, Oxford, 2014.

○ Dalton, James A., and Louis Esposito. "Standard oil and predatory pricing: Myth paralleling fact." Review of Industrial Organization 38.3 (2011): 245-266.

○ Richard J. Gilbert, "The Role of Potential Competition in Industrial Organization," Journal of Economic Perspectives, 3(3), 1989: 107-127.

Problem Set 4 due. Answers

2/28 W

10. Vertical Antitrust Cases

W. Kip Viscusi, Joseph E. Harrington, Jr., John M. Vernon (2005) "Vertical Mergers and Vertical Restraints," Chapter 8 in Economics of Regulation and Antitrust, MIT Press.

○ Michael Riordan and Stephen Salop, "Evaluating Vertical Mergers: A Post-Chicago Approach," Antitrust Law Journal, Winter 1995.

"A merger between CVS Health and Aetna could be what the doctor ordered." Economist, 28 Feb. 2018

3/5 M


Exam   Answers

3/7 W

11. Antitrust and Technological Change

Crandall, R. W., & Jackson, C. L. (2011). Antitrust in high-tech industries. Review of Industrial Organization, 38(4), 319-362.

○ Brennan, T. J. (2011). “High-Tech” Antitrust: Incoherent, Misguided, Obsolete, or None of the Above? Comments on Crandall-Jackson and Wright. Review of Industrial Organization, 38(4), 423-433.


III. Economic Regulation

3/26 M

12. Economic Regulation and Natural Monopoly

Christopher Decker (2015) “Forms of Price Regulation,” Chapter 5 in Modern Economic Regulation, Cambridge University Press.

3/28 W

13. Electricity and Peak Loads

Borenstein, S. (2016). The economics of fixed cost recovery by utilities. The Electricity Journal, 29(7), 5-12.

Borenstein, S. (2012). The private and public economics of renewable electricity generation. Journal of Economic Perspectives, 26(1), 67-92.

ISO New England Data

4/2 M

14. Franchises

Jose Gomez-Ibanez (2003), "The Evolution of Concession Contracts: Municipal Franchises in North America," Chapter 7 in Regulating infrastructure: monopoly, contracts, and discretion, Harvard University Press.

Borenstein, S. (1988). On the efficiency of competitive markets for operating licenses. The Quarterly Journal of Economics, 103(2), 357-385.

Gómez-Ibáñez, J. A. (2016). Open access to infrastructure networks: The experience of railroads. Review of Industrial Organization, 49(2), 311-345.

○ Boyer, Kenneth D. "Three Principles for Optimal Pricing of Trackage Rights." Review of Industrial Organization 49, no. 2 (2016): 347-369.

○ Pittman, R. (2005). Structural separation to create competition? The case of freight railways. Review of Network Economics, 4(3).

○ Modernizing Freight Rail Regulation, TRB Special Report 318, 2015.

Problem Set 5 due. Answers

4/4 W

15. Transportation and Common Carriers

Sherman, Chapter 16.

Perelman, M. (1994). Retrospectives: fixed capital, railroad economics and the critique of the market. Journal of Economic Perspectives, 189-195.

○ Jose Gomez-Ibanez and John Meyer, "The Rediscovery of Private Contracts: U.S. Railroad and Airline Deregulation," Chapter 8 in Regulating infrastructure : monopoly, contracts, and discretion, Harvard University Press, 2003.

○ Russell Pittman, "The Economics of Railroad 'Captive Shipper' Legislation," Administrative Law Review, Volume 62, Number 3, Summer 2010.

Eli Noam (1994), "Beyond liberalization II: The impending doom of common carriage, " Telecommunications Policy, 18(4): 286-294.

Brett Frischmann (2005), "An Economic Theory of Infrastructure and Commons Management," Minnesota Law Review, 89 April.

Grand Junction Railway


4/9 M

16. Interconnection and Telecommunications

Tim Wu Chapters 3 and 18 in The master switch: The rise and fall of information empires. Knopf, 2010.

○ Milton Mueller Jr. (1997) Universal Service: Competition. Interconnection, and Monopoly in the Making of the American Telephone System, Cambridge.

Problem Set 6 due. Answers


4/11 W

17. Internet and Network Neutrality

Klint Finley (2018) "Net Neutrality: Here's Everything You Need To Know." WIRED, 11 Apr.

Tim Wu (2018) "How the FCC's Net Neutrality Plan Breaks With 50 Years of History." WIRED, 11 Apr. 2018.

The FCC, Internet Service Providers, and Access Charges, an FCC fact sheet from the the age of dial-up.

Christiaan Hogendorn (2010), "Spillovers and Network Neutrality," in Gerry Faulhaber, Gary Madden, and Jeffrey Petchey, eds., Regulation and the Performance of Communication and Information Networks, Edward Elgar.

Jon Brodkin (2014), "One big reason we lack Internet competition: Starting an ISP is really hard," Ars Technica, April 6.


IV. Regulation and Technology

4/16 M

18. The DMCA

David Kravetz (2015), “How the DMCA Made YouTube,” Ars Technica.

Boudreau, Kevin and Jeppesen, Lars Bo and Miric, Milan (2018), Digital 'Mash-Ups,' Patents, and Copyright (January 7, 2018). Available at SSRN. 

○ Aguiar, L., & Waldfogel, J. (2016). “Even the losers get lucky sometimes: New products and the evolution of music quality since Napster.” Information Economics and Policy, 34, 1–15.

○ Julia Bluff (2016) “Good News! Fixing Your Car Isn’t Illegal Anymore!”

○ Robert Levine, Chapter 1 in Free Ride, Doubleday, 2011.

Problem Set 7 due. Answers

4/18 W

Class Cancelled

4/23 M

19. Congressional Hearing Number 1

Agenda and Teams

Lee, Edmund (2018). "ATT-Time Warner merger: What you need to know about the Trump administration’s lawsuit against it." Recode, 16 Mar.

"The Case for the AT&T-Time Warner Deal." WSJ, 31 Oct. 2016.

John Cassidy (2017) "The Economic Case Against an A.T. & T.-Time Warner Merger." New Yorker, 22 Nov.

Kang, Cecilia (2018). "AT&T Would Use Time Warner as a ‘Weapon,’ Justice Dept. Says." N. Y. Times, 22 Mar.

Fung, Brian (2018). "Time Warner CEO calls the government’s case against AT&T ‘ridiculous’." Washington Post, 19 Apr.

Fung, Brian (2018). "AT&T’s CEO took the stand in the Time Warner trial. Here’s what he said." Washington Post, 19 Apr.

Mark Sullivan (2018) "AT&T/Time Warner Case Will Be A Court Drama For The Trump Era." Fast Company, 19 April.

Puzzanghera, Jim (2018). "Justice Department's effort to halt AT&T-Time Warner merger goes to trial as both sides spar over evidence." Las Angeles Times, 19 Mar.

"AT&T’s merger with Time Warner goes on trial." Economist.

Lee, Timothy B. (2016) "Why the strongest case for ATT's merger with Time Warner is also the case against it." Vox, 25 Oct.

"Is AT&T’s bid for Time Warner vague or Machiavellian?" Economist, 16 Nov. 2017.

White Papers Against Merger:

Cooper, M. (2018). Antitrust Practice, Economic Evidence And Market Reality Compel The Department Of Justice To Oppose The At&T-Time Warner Merger. Consumer Federation of America.

White Paper on AT&T/T-Mobile merger, American Antitrust Institute.

Resource from AT&T in Favor of the Merger:

AT&T and Time Warner

4/25 W

20. Search and Social Media

“Silicon Valley, we have a problem,” The Economist, 1/20/18.

L. DeNardis, A.M. Hackl (2015), “Internet governance by social media platforms,” Telecommunications Policy, 39(9): 761–770. 

Chris Anderson and Michael Wolff (2010) “The Web Is Dead. Long Live the Internet,” Wired August 17.

Carole Cadwalladr (2016) “Google, democracy and the truth about internet search,” The Guardian.

4/30 M

21. The EU, the FTC, and Privacy

Robbie McBeath (2018) The Trump FTC and the Internet | Benton Foundation. (2018, April 27).

"Senate confirms full slate of FTC commissioners." TheHill, 26 Apr. 2018.

Solon, Olivia (2018). "How Europe's 'breakthrough' privacy law takes on Facebook and Google ." the Guardian, 19 Apr.

Jon Brodkin (2018) AT&T loses years-long quest to cripple FTC authority over telecoms. (2018, April 27).

Timberg, Craig (2018). "Why all your favorite apps are serving you new privacy prompts." Washington Post, 26 Apr.

Bazelon, Coleman and McHenry, Giulia (2013), “Violating Your Privacy: An Economist's Perspective”. TPRC 41: The 41st Research Conference on Communication, Information and Internet Policy. 

FTC (2011) “Facebook Settles FTC Charges That It Deceived Consumers By Failing To Keep Privacy Promises”

Akiva Miller (2014). What Do We Worry About When We Worry About Price Discrimination? The Law and Ethics of Using Personal Information for Pricing. Journal of Technology Law & Policy, 19, 41.

Problem Set 8 due. Answers

5/2 W

22. Diversity and Media

State of the News Media, Pew Research Center.

Alexander, P., & Brown, K. (2007). Policymaking and policy trade-offs: Broadcast media regulation in the United States. In P. Seabright & J. Von Hagen (Eds.), The Economic Regulation of Broadcasting Markets: Evolving Technology and Challenges for Policy (pp. 255-279). Cambridge: Cambridge University Press. doi:10.1017/CBO9780511611124.008

Wineburg, Sam and McGrew, Sarah and Breakstone, Joel and Ortega, Teresa. (2016). “Evaluating Information: The Cornerstone of Civic Online Reasoning.” Stanford Digital Repository.

News Integrity Initiative CUNY.

 5/7 M

23. Cybersecurity

William R. Denny (2016) "Cybersecurity as an Unfair Practice: FTC Enforcement under Section 5 of the FTC Act” Business Law Today, American Bar Association." June 2016.

Chris Jay Hoofnagle (2017), FTC Regulation of Cybersecurity and Surveillance, in The Cambridge Handbook of Surveillance Law, David Gray and Stephen Henderson, eds., Cambridge University Press 2017. 

Problem Set 9 due. Answers

5/9 W

24. Congressional Hearing Number 2

Agenda and Teams

Babette Boliek (2018) "Will regulatory action protect consumer privacy or Facebook’s profits?" American Enterprise Institute, 27 Apr.

"Klobuchar, Kennedy Introduce Bipartisan Privacy Legislation to Protect Consumers’ Online Data." U.S. Senator Amy Klobuchar, 27 Apr. 2018.

David Cicilline and Terrell McSweeny (2018) "Competition Is at the Heart of Facebook’s Privacy Problem." WIRED, 24 Apr.

Susan Crawford (2018) "Calling Facebook a Utility Would Only Make Things Worse." WIRED, 20 Apr.

James Pethokoukis (2018) "Breaking up Facebook won't solve any of the problems that make its users angry - AEI." AEI, 27 Apr.

Porter, E. (2018). The Facebook Fallacy: Privacy Is Up to You. New York Times.

Stewart, E. (2018). Section 230 and FOSTA-SESTA: the next free internet battleground. Vox. 

Wakabayashi, D., & Satariano, A. (2018). How Looming Privacy Regulations May Strengthen Facebook and Google. New York Times.

Proposed Consent Act (link to actual proposal in the webpage)

Ryan Grim (2017) "Steve Bannon Wants Facebook and Google Regulated Like Utilities." Intercept, 27 July.

Scott Thurm. (2018). This Silicon Valley Lawmaker Has a Plan to Regulate Tech. WIRED.

Natasha Singer (2018) Creepy or Not? Your Privacy Concerns Probably Reflect Your Politics. (2018, April 30). The New York Times Company. 

Steven Levy (2018). Mark Zuckerberg Says It Will Take 3 Years to Fix Facebook. WIRED.

Tony Romm (2018). The agency in charge of policing Facebook and Google is 103 years old. Can it modernize? Washington Post.

5/16 W


To be e-mailed to you at 10am and due by pdf (scanned or typed) or on paper under my office door by 10am on May 17. Take 2 hours to do the exam. It is open notes and open book, but no help. I will be in PAC 002 10am-12pm if you want to take it the conventional way or ask questions.