Lec 15 - Lecture 9 (Regular) - Regulation. ECON 20100: The Elements of Economic Analysis E. Glen Weyl, Assistant Professor of Economics and the College "Regulation," November 3, 2011. The first part of this course discusses markets with one or a few suppliers. The second part focuses on demand and supply for factors of production and the distribution of income in the economy. This course also includes some elementary general equilibrium theory and welfare economics. This lecture discusses the regulation of natural monopolies and industries, such as health insurance, where selection undermines the efficient operation of markets. We discuss the causes of natural monopoly and why the natural solution of marginal cost pricing is so impractical. Then discuss the more common solution of average cost pricing, exploring its advantages and disadvantages. Finally, we discuss how competition in the market place can lead to average cost pricing and the distortions this causes in markets, like insurance, where different consumers bring different values to the market. For readings associated with this lecture and slides, visit: http://www.glenweyl.com/teaching
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