``Business Enterprise and Public Policy'' G406, Spring 2007 (3 May 2007)

I. Overview of Regulation

1. Equilibrium and Optimality

To read:

• "Economic Regulation and Social Regulation"
  
• "Behind Slow Growth in Europe: Citizens' Tight Grip on Wallets: A Thicket of Laws to Protect People Damps Spending," Marcus Walker, The Wall Street Journal, 10 December 2004, p. A1.
  
  

For reference:

• Slides on value maximization
  

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2. Market Failure and Government Failure

To read:

• "Economic Regulation and Social Regulation"
  
• "Government Regulation in a Free-Market Society,"Chapter 7, The Economic Report of the President, 2004, http://www.gpoaccess.gov/usbudget/fy05/pdf/2004_erp.pdf (original) or just that chapter.
  
  

For reference:

• Slides on market failure
  
• A World Bank site on doing business in different countries
  
• Dept. of Labor minimum wage FAQ and interactive map showing state minimum wages.
  

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3. The Making of a Regulation

To read:

• Viscusi, Chapter 2.
  
• "Manager's Journal: The Federal Register: Capitalist Tool," Bruce D. Fisher, The Wall Street Journal, 3 June 1985, p. 1.
  
  
• I have posted the supply-and- demand analysis of required health insurance benefits that we did in class.
  
  

For reference:

• Powerpoints on administration
  
• SCHOOL RECORDS REGULATIONS. Here is the Buckley Amendment, or FERPA, from the United States Code. Falvo v. Owasso 534 US 426 (2002) is perhaps the leading Supreme Court case interpreting it, a case in which the U.S. Solicitor General supported less regulation. The Dept. of Education has made regulations, of which the definitions are key, and issued opinion letters saying no grades allowed on postcards and no use of the last 4 digits of SS number for posting grades. Also, I've linked the Dept. of Education FERPA site and Indiana University's "Main Points for Faculty to Remember".
  

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4. Antitrust Law

January 30. Introduction to Antitrust

To read:

• Viscusi, Chapter 3.
  
• FTC "Frequently Asked Questions" on antitrust law.

For reference:

• Verizon v. Trinko , 540 U.S. 398 (2004)
  
• Overheads of Antitrust laws
  
• "How Driving Prices Lower Can Violate Antitrust Statutes; 'Monopsony' Suits Mount as Companies Are Accused of Squeezing Suppliers," The Wall Street Journal, 27 January 2004.
  

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5. Oligopoly and Collusion

To read:

• Viscusi, Chapters 5, 6: pages 101-112, 121-124 127-144, 155-164.
  
• The Oligopoly Game
  

For reference:

• Some powerpoint slides on collusion.
  
• A 2004 footnote on how the government charges fines of more than $10 million.
  
• "Kerasotes Movie Ban at Von Lee Argued in Court" Bloomington Herald-Times, 29 January 2004. The Bloomington court's Von Lee decision.
  
• "U.S. Judge Blocks Antitrust Case against Shipping Giant Stolt," William Bulkely, The Wall Street Journal , 17 January 2005.
  
• The The Taft opinion in Addyston Pipe
  
• "Low Purchase Prices, Flurry of Noncompete Pacts Raise Questions at Hollinger," The Wall Street Journal , 30 January 2004.
• Noncompete Agreements-- a do-it-yourself website.

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6. Mergers

To read:

• Viscusi, Chapter 7

• "Notes on Mergers and Surplus"

For reference:

• Various merger powerpoints .
  
• The court opinion in the Staples-Office Depot merger case, and my overheads on it.
  
• "FTC Targets Hospital Merger in Antitrust Case Agency Expects Vigilance on Medical M&A to Help Rein In Health- Care Costs," Bernard Wysocki, The Wall Street Journal, 17 January 2005. "FTC Wins First Round of Hospital Merger Case" Andre P. Barlow, Dec. 7 2005, www.antitrustlawblog.com.

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II. Price and Quantity Regulation

7. Economic Regulation.

To read:

• Viscusi, Chapter 10
• "Coffin Break; Busting Oklahoma's Casket Cartel Would Cut the Cost," Jacob Sullum, Reason, 31 December 2004.
  

For reference:

• Slides on chapter 10.

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8. Natural Monopoly

To read:

• Viscusi, Chapter 11: pp. 401-403, 408-423.
  
  

For reference:

• Powerpoint slides on chapter 11.
• A list of topics for the 2007 midterm.
• "District's Tax Plan Trashed," Bloomington Herald Times .
  
• A press release from Senator Schumer on the Essential Air Service program.
• The War of Attrition/Natural Monopoly game
  
  

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9. Electric Power

To read:

• Viscusi, Chapter 12. Skip 433-436.
  
• Kokomo Gas and Smithville Telephone's service areas
  
• The East Indiana Power Company mini-case on rate hearings.

For reference:

• Powerpoint slides on chapter 12.
• The Duke Energy financial statements, including its 10K (for regulatory assets). My annotated Duke Kentucky financial statements.
  
• A WSJ article on electricity deregulation across the states.
  
• The Indiana Utility Regulatory Commission
  

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III. Regulation for Information and Externalities

10. Political Economy and Regulation

To read:

• Viscusi, Chapter 19.
  
• "More Employers Ask Job Seekers for SAT Scores," Kemba J. Dunham The Wall Street Journal, 28 October 2003, p. B1.
  
• Articles on Erin Brockovich and benzene in Beverly Hills from The New Republic, The Wall Street Journal, and Columbia Journalism Review.
  
• The thinking test's master version, version AA, version BB, and powerpoint slides .

  For reference:

  • Powerpoint slides for Chapter 19.
    
  • "The Price of Discrimination Set-Asides May Die Soon, Now that Officials Are Being Held Liable," John Sullivan & George La Noue, The Weekly Standard, 27 December 2004, Volume 10, Issue 15.
    
  • "TV and Film Industry Wins Waiver on Truck- Safety Rules,"The Wall Street Journal, 29 January 2004.
    

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11. Environmental Regulation

To read:

• Viscusi, Chapter 21.
  
• The 1991 Larry Summers toxic waste memo
  
  

For reference:

• Powerpoint slides for chapter 21
  
• Water Pollution in China
  
• Making Nuclear Missiles Comply with EPA Regulations
  
• Save Toby, the bunny-killing extortion website.
  
• "Recycling Is Garbage," John Tierney, New York Times, 30 June 1996, Sunday, Section 6, Page 24, Column 1.
  
• "Scientists Revisit Idea that a Little Poison Could Be Beneficial," Sharon Begley, The Wall Street Journal 19 December 2003.
  
• "Death by Environmentalist," The Wall Street Journal, 29 December 2004, p. A8.
  
• The fisheries classroom game in pdf
  
• "Invisible Export a Hidden Cost of China's Growth: Mercury Migration Turning to Coal, Nation Sends Toxic Metal around Globe; Buildup in the Great Lakes Conveyor Belt of Bad Air," Matt Pottinger, Steve Stecklow, and John J. Fialka, The Wall Street Journal, 17 December 2004, p. A1.
  

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12. Global Warming

To read:

• Data: NASA data on global temperatures monthly 1880-present, and annual temperatures, total and by hemisphere, and world weather station data, picking points on a map (unadjusted for urbanization, etc.).
  
• "Some Economics of Global Warming," Thomas C. Schelling, The American Economic Review, 82(1): 1-14 (March 1992).
  
• The Pew Center on Global Climate Change: Economics FAQs and Policy FAQs, http://www.pewclimate.org/global-warming-basics/faq_s/.
  
• The Supreme Court opinion in Massachusetts v. EPA , in an abridged version for you to read and the unabridged opinion.
• A 2007 Washington Post article on carbon permit trading in Europe.

For reference:

• Powerpoint slides on global warming
  
• IPCC "Climate Change 2001: Synthesis Report; Summary for Policymakers."
  
• "Two Thirds of EU Countries Set to Miss Kyoto Commitments," IPPR, http://www.ippr.org.uk/pressreleases/?id=1863, 27 December 2005.
  
• "Kyoto's 'Capitalists'," The Wall Street Journal, 13 December 2004, p. A16.
• The Cato Institute: "Global Warming and Climate Change, chapter 48, The Cato Handbook on Policy, 6th Edition (2005), http://www.cato.org/pubs/handbook/hb109/hb_109-48.pdf.
  
  

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13. Paternalistic Regulation

To read:

• Richard H. Thaler and Cass R. Sunstein, "Libertarian Paternalism," The American Economic Review, Vol. 93, No. 2, Papers and Proceedings of the One Hundred Fifteenth Annual Meeting of the American Economic Association, Washington, DC, January 3-5, 2003. (May, 2003), pp. 175-179.
• State liquor- shipping laws: the Tanford story
• Norm Stamper, "Legalize drugs --all of them," Seattle Times, http://seattletimes.nwsource.com/html/opinion/2002661006_sunstamper04.html, December 4, 2005.
• James Q. Wilson, "Against the Legalization of Drugs," Commentary, February 1990, 89(2): 21-28.
• Benson B. Roe, "Why we should legalize drugs," http://www.druglibrary.org/schaffer/Misc/roe1.htm.
• "Does U.S. Ban on E-Gambling Violate WTO?" Scott Miller, The Wall Street Journal , 28 January 2004, p. B1, and "Ruling Unlikely to Deter Gaming,"Wired News, Joanna Glasner Apr. 09, 2005; and "U.S. Ignores WTO Ruling on Internet Gambling".
  
• "Ants and Grasshoppers", Kevin A. Hassett, The Wall Street Journal , 7 February 2005, p. A.18.
  
• James Fitzjames Stephen, "The Doctrine of Liberty in Its Application to Morals," Chapter IV of Liberty, Equality, Fraternity, Hypertext by Terrence Berres, London: Smith, Elder, & Co. (1873) (my original source here).
  
• "Why a London Pol Thinks These Ladies Shouldn't Get Calls; He Asks Cellphone Companies to Hang Up on Prostitutes; Fake Cards, CEO Numbers," David Pringle, The Wall Street Journal, 7 February 2005, p. A.1.
  

For reference:

• Powerpoint slides on morals regulation.
  
• "Bankrupt Criticisms: The Bankruptcy Bill Deserves To Pass," http://www.nationalreview.com/comment/zywicki200503150744.asp, Todd Zywicki, March 15, 2005. Excerpted here.
  
• Euthanasia: Richard Miniter, "The Dutch Way of Death Socialized medicine helped turn doctors into killers," The Wall Street Journal, Saturday, April 28, 2001. Mark Bergin, "Rogue state law: Euthanasia advocates celebrate Oregon as a nationwide model," World, April 09, 2005, http://www.worldmag.com/displayarticle.cfm?id=10503. Bob Barr, "Euthanasia . . . or a 'Dutch treat'" Washington Times, 26 December 2004.
  
• Crime and Drug Legalization," Schaffer Library of Drug Policy, http://www.druglibrary.org/schaffer/debate/myths/myths3.htm.

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14. Product Safety and Litigation

To read:

• Viscusi, Chapter 22.
  
• "The Tort System," Chapter 11 of The Economic Report of the President, 2004, http://www.gpoaccess.gov/usbudget/fy05/pdf/2004_erp.pdf.
  

For reference:

• Powerpoints for Chapter 22.
  
• "The Patient's Right Not to Sue; How about a Right to Opt Out?", James D. Miller, The Weekly Standard, 13 August 2001, Volume 6, Issue 45.
  
• "La Grippe of the Trial Lawyers,"William Tucker, The Weekly Standard, 25 October 2004, Volume 10, Issue 7.
  
• "Risky Riders Touting Freedom, Bikers Take Aim at Helmet Laws Fatality Rates Are Increasing As Campaign Succeeds; Manufacturers Bow Out Sputnik Travels to 39 States," Karen Lundegaard, The Wall Street Journal , 30 November 2004, p. A1.
  
• Articles from The Wall Street Journal on drug for mental illness, lack of lupus drugs, and hearing aids.
  
• Pontius Pilate as bureaucrat handout
  

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15. Regulation in the Workplace

To read:

• Viscusi, Chapter 23.
  
  

For reference:

• Powerpoints for Chapter 23
  
• Articles on American workers in Iraq and fishermen.
  

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Review
      Last part of course, outline

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Before the final, read this Carhart excerpt.
URL: http://www.rasmusen.org/g406/0.g406.htm. Indiana University, Department of Business Economics and Public Policy, in the Kelley School of Business , BU 456, 1309 East Tenth Street, Bloomington, Indiana 47405-1701, (812)855-9219. Comments: Erasmuse@Indiana.edu.

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