Competition Policy in the Transition: Theory, Implementation and Challenges

The objective of this course is to equip the participants with the economic tools needed for a critical appraisal of the welfare effects of competition, competition legislation, and alternative competition policy decisions. It aims to support lecturers in competition policy, as well as independent competition analysts in their work to deliver the economic expertise necessary for the growing political debate, legal disputes, and administrative decision-making processes concerning market power and antitrust, mergers and acquisitions, state subsidisation, etc. that are now underway in all transition countries.

The course is conceived as a blend of positive and normative analysis of competition. It is planned as a comprehensive coverage of the theory of competition, but it will also have a strong public policy ingredient. It will acquaint the participants with the latest conceptual thinking in the field, and will draw inferences for policy implementation. The crux of the analytical approach to each aspect of the theory will be its use for the formulation of welfare enhancing competition policy. At the same time, the assessment of competition policies and legislation will be centred on two kinds of effects: the workings of competition to increase market efficiency, and the contribution of competition to social welfare.

The course will comprise six ‘core’ modules of teaching and discussions, and will conclude with an interactive simulation game of imaginary competition adjudication. After a brief introductory revision of the basic concepts of oligopoly theory, the first module will set up the subsequent discussion by addressing the known facts about the interactions of competition and efficiency. The next four modules will take up issues that are subject of a hot debate both in the theoretical concepts involved and in their inferences for public policy design. These include, among others, the permissible levels of market power and market concentration, the role of the market as a selection mechanism, and the controversies of international trade and domestic competition. A special module will be dedicated to the competition policy of the European Union, the philosophy of its evolution, and competition-related problems of the EU enlargement. The concluding simulated competition adjudication will make participants explore the practical applicability of the theory they will have learned.

Target audience
The course is aimed at two groups of professionals: academics and competition practitioners. The economics of competition is increasingly finding its way into university curricula all across CEE and FSU: either as a stand-alone course, or as a growing ‘competition’ component in a variety of related courses, such as applied microeconomics, industrial organisation, law and economics, regulation, etc. Therefore, the course is primarily intended to assist young university lecturers, assistant professors, advanced postgraduate students and other scholars who are teaching or planning to teach such subjects at their home universities and institutes.

Competition practitioners in governmental agencies and private consultancy firms are usually economists and lawyers; this course is planned for the economists among them. While lawyers are also welcome to apply, they will be expected to have acquired some extra background in economics as well.

Course level
The course will be offered at a good upper-intermediate level. The only economics prerequisite is intermediate microeconomics, roughly at the level of the popular textbook of Hal Varian "Intermediate Microeconomics" (W.W.Norton & Co.), which has been translated in several transition countries. Previous exposure of the candidates to industrial economics will be an advantage. Condensed refresher of the relevant economic theory needed for this course will be included in the preliminary reader that will be distributed to successful applicants.

As for the mathematical prerequisites, to fully appreciate the course candidates should know at least the rudiments of multivariate calculus. Ideally, but not necessarily, some acquaintance with non-cooperative game theory would also be desirable. However, this course will rely more on narration and intuition, rather than mathematical rigour. Game-theoretical concepts will be introduced gently by the instructors, wherever needed. Nobody should be discouraged to apply for lack of mathematical sophistication, because in its core the course is planned to be intelligible for all participants with basic knowledge of intermediate microeconomics. In particular, participation of competition practitioners with down-to-earth experience in competition policy in the transition countries will be most welcome.