90299 - Public Economics

Learning outcomes

This course introduces students to the foundations of public economics, cost-benefit analysis, regulation, and competition policy. At the end of the course, students: (a) master the fundamental concepts of public economics, the economic rationale of public policy, and the main tools of public intervention in the economy; (b) are able to assess public policies by quantifying in monetary terms the value of all consequences of a policy to all members of society; (c) know how to correct market imperfections by means of competition and antitrust policy.

Course contents

Part A: Foundations

• Externalities
• Public goods and common resources
• Consumer surplus, producer surplus, and efficiency
• Motives for government intervention in the economy
• Introduction to the economics of the welfare state

  Part B: Cost-benefit analysis

• Conceptual foundations of cost-benefit analysis
• Valuing impacts from observed behavior in markets
• Predicting and monetizing impacts
• Discounting future impacts and the social discount rate
• Cost-benefit analysis under uncertainty
• Contingent valuation and shadow prices
• Cost-effectiveness analysis

  Part C: Market regulation and competition policy

• Competition policy: definition, history, and the law
• Market definition and assessment of market power
• Collusion and enforcement of cartel laws
• Horizontal mergers and acquisitions
• Vertical restraints and vertical mergers
• Predation, monopolization, and other abusive practices
• The regulation of digital markets

Readings/Bibliography

Provisional and incomplete

Boardman, A., Greenberg, D., Vining, A., & Weimer, D. “Cost-Benefit Analysis: Concepts and Practice (5th ed.)”, Cambridge University Press, 2018.

Massimo Motta, "Competition Policy: Theory and Practice", Cambridge University Press, 2004.

Fumagalli, Motta, Calcagno, "Exclusionary Practices: The Economics of Monopolisation and Abuse of Dominance", Cambridge University Press, 2018.

Teaching methods

Lectures, home assignments, and tutorials. Students may be asked to present material to lead discussion on some topics.

Assessment methods

Written exams, and possibly problem sets and development of individual or group projects.

The written exam consists of an intermediate test on Part A (Foundations) at the end of the 1st sub-cycle, and a final test at the end of the 2nd semester. The final test covers all parts of the course: A-Foundations, B-Cost-Benefit Analysis and C-Market regulation and competition policy. Students who have taken the intermediate test on Part A, may choose to take a "full" final test on all parts or a "partial" final test, omitting part A. 

The final grade is the average of the grades in the three parts of the course. If this average is above 18, students can pass the exam even if they failed to score at least 18 in either parts A, B, or C.

The grading scale is the following:

<18: Fail

18-23: Sufficient

24-27: Good

28-29: Very good

30: Excellent

30 cum laude: Outstanding (the instructor was impressed)

Teaching tools

A combination of: slides, research articles, policy reports, lecture notes, example exercises. All teaching materials will be available on Virtuale

Office hours

See the website of Daniele Fabbri

See the website of Giulio Zanella

See the website of Elena Argentesi