Syllabus: V640

Law, Public Management and Public Policy

Spring 2008

Monday & Wednesday 4:00-5:15 PM

PV 278

 

 

 

Kenneth Richards

Office: SPEA Rm. 410

Telephone: 855-5971

Email:  kenricha@indiana.edu

Office Hours: MW 9:00 AM - 10:30 PM

Website: http://classwebs.spea.indiana.edu/kenricha/ 

 

Introduction

 

 

Course Objectives

 

·        To introduce you to concepts in social choice, collective action, contracting, governance and law.

 

·        To encourage you to recognize the challenges of organizing cooperative action in many different contexts.

 

·        To introduce you to the tools via which small and large groups - teams, partnerships, organizations and governments - manage to cooperate and promote productive activity. 

 

·        To promote your insight into the nexus of law, management and policy.

 

·        To introduce you to a few basic concepts of public and administrative law.

 

·        To provide you with the opportunity to explore how these concepts can be applied in specific areas that interest you.

 

Student Responsibilities

 

1.         Attend class, read assignments, and participate in class discussions and exercises.

2.         Complete all assignments in a timely manner.

 

I tend to use a semi-Socratic method in class.  This means I will be calling on you to explain or discuss concepts and cases in class.  It will behoove you to have all readings completed before class and be ready to discuss them. 

 

Readings and Materials

  1. Lane. 2007. Public Administration and Public Management: The Principal-Agent Perspective. Routledge. (Hereinafter, Lane).

  2. Hansmann. 1996. The Ownership of Enterprise. Belknap Harvard. (Hereinafter, Hansmann).

  3. Olson, Mancur. 1971 (any edition). The Logic of Collective Action: Public Goods and the Theory of Groups. Harvard University Press. (Hereinafter, Olson)

  4. Sundry articles and chapters posted to this class website.

Recommended:

 

    Williamson. 1985. The Economic Institutions of Capitalism.  Free Press. (Hereinafter, Williamson).

 

This is a graduate course.  How much reading you do is largely up to you. The more of the materials you read, the more you will know.  The more you discuss the ideas among yourselves, the more you will understand.

 

I will rely heavily on the class website to disseminate class materials.  Please check regularly for new and updated materials.

 

Course Grades

 

Your grade in this class will be based on the following:

Short Papers: 25%
Research Paper:     40%
Final: 20%
Class exercises and participation:  15%
Total: 100%

 

The translation of numbers to grades will follow the standard format:

 

Above 93  - A

90-92        - A-

87-89             - B+

 

...and so on. At the end of the semester I round the weighted sum of number grades to the nearest integer before assigning a letter grade. 

 

I will give several in-class assignments throughout the semester.  You are expected to come to class prepared, i.e., having read the assigned material. 

 

There will be a comprehensive take-home final at the end of the class. 

 

SHORT PAPERS

 

I will assign short essay questions throughout the semester to help you either prepare for class or digest the materials we have discussed in class.  The essays will generally be brief - about 200 to 600 words.  This does not mean the assignments will not be challenging.  In fact, clear analysis, careful construction of concepts, and economy of writing will be at a premium precisely because the length is limited.  If you have trouble writing clearly, plan to get frequent assistance from the Writing Tutorial Services (http://www.indiana.edu/~wts/).

 

RESEARCH Papers

 

In addition to class readings and discussions, the primary focus of the semester will be on the individual research papers that you develop.  You will be responsible for identifying a topic that benefits from the application of the concepts discussed in this course.  Your papers will be scholarly in nature, demonstrating both a mastery of the relevant literature and innovation through theory or application.  Examples of topics include "Information and the Principal-Agent Relation in Public Administration Law", "The Use of Hostages to Promote International Development Investment", and "Signaling Commitment in Regulation of Environmental Externalities".

 

While the length of you paper is far less important than the quality, it is likely that you will need at least 15 pages (double-spaced) to provide an adequate treatment of a significant issue.  I will provide additional details early in the semester. 

 

Attendance

 

You are expected to attend all classes.  If you are unable to attend class, please notify me by e-mail ahead of time.

 

Academic Misconduct

           

I will not tolerate academic misconduct.  The Indiana University Code of Student Rights, Responsibilities and Conduct, Section III A discusses student academic misconduct. You can find this information on the website at http://dsa.indiana.edu/Code/index1.html. Any student found cheating or engaging in other academic misconduct will receive a failing grade for the course and will be reported to the Dean of Student Affairs.  Other sanctions are possible.   On average, I have had to fail one student per semester for the past several semesters due to academic misconduct.  I hate doing this.  

  

Reading Assignments and Class Schedule

 

Reading assignments should be completed before class on the day they are assigned. This schedule is subject to change and updating as the course progresses, based on class progress and interests.

 

Tentative Class Schedule

 

Section I: Introduction to Collective Action

 

 

January 7:    

Collective Action - Basics

 

Reading:

 Olson, Chapters I and II
     

January 9:    

Unions

 

Reading: 

 Olson, Chapter III
     

 January 14:

 Pressure Groups and Special Interests

 Olson, Chapter V and VI
     

Section II: Principal-Agent Relations

 

 

 

January 16: 

 Introduction to P-A Relations

 

 

Reading: 

 Eisenhardt, Kathleen. 1989. "Agency Theory: An Assessment and Review." The Academy of Management Review 14(1): 57-74.
     
    Sappington, David. 1991. "Incentives in Principal-Agent Relationships." The Journal of Economic Perspectives. 5(2): 45-66.
     
    Laffont, Jean-Jacques and David Martimort. 2002. "Incentives in Economic Thought." Chapter 1 in The Theory of Incentives: The Principal-Agent Model,  Princeton University Press.
     
January 21: No class - Martin Luther King Day  

 

 

  

January 23:    

How the Law Addresses Principal-Agent Relations

 

Reading: 

 Mallor, J., A.J. Branes, T. Bowers, and ALangvardt. 2004. "The Agency Relationship." Chapter 35 in Business Law: The Ethical, Global, and E-Commerce Environment McGraw Hill/Irwin.
     
   

Mallor, J., A.J. Branes, T. Bowers, and ALangvardt. 2004. "Third Party Relations of the Principal and the Agent" Chapter 36 in Business Law: The Ethical, Global, and E-Commerce Environment McGraw Hill/Irwin.

 

 

  
Section III: Transaction Cost Economics

 

 

 

January 28:

Basic Transaction Cost Issues

 

 Reading: 

 Williamson, Chapter 1
   

Willaimson, 1998. "Transaction Cost Economics: How it Works; Where it is Headed" De Economist, 146(1): 23-58.

January 30:

Contracting

 

Reading: 

 Williamson, Chapter 2

 

 

 Williamson, Chapter 3
     

February 4:

 Vertical Integration

 

 

Reading: 

 Williamson, Chapter 4
     

February 6:

 Vertical Integration  

 

Reading: 

 Williamson, Chapter 5

 

 

 

February 11:

 Limits of the Firm

 

Reading: 

 Williamson, Chapter 6

 

 

  

February 13:

 Credible Commitments  

 

Reading: 

 Williamson, Chapter 7

 

 

 Williamson, Chapter 8
    Williamson, Oliver E. 1983. "Credible Commitments: Using Hostages to Support Exchange," American Economic Review 73, 4 : 519-40.
     

February 18:

 Organization of Work  
 

Reading: 

 Williamson, Chapter 9
     
Section IV: Organizing Productive Activities

 

February 20:

 Basic Theory of Enterprise  

 

Reading: 

 Hansmann, Part I
     

February 25:

 Producers as Owners  
 

Reading: 

 Hansmann, Part II
     
February 27: Producers as Owners
 

Reading: 

 Hansmann, Part II
     
     
   
March 3: Customers as Owners
 

Reading: 

 Hansmann, Part III
     
   
March 5: Customers as Owners
 

Reading: 

 Hansmann, Part III
     
NO CLASS - SPRING BREAK
     

March 17:

 Nonprofit Enterprise  
 

Reading: 

 Hansmann, Part IV
March 19: Mutual Enterprise  
 

Reading: 

 Hansmann, Part IV
     

 Section V: Governing the Large Enterprise - National Government  

March 24:

 Government as a Principal-Agent Undertaking
 

Reading: 

 The United States Constitution
     
    The Bill of Rights
     
    North, Douglass and Barry Weingast. 1989. "Constitutions and Commitment: the Evolution of Institutional Governing - Public Choice in Seventeenth-Century England." The Journal of Economic History 49(4): 803-832.
     
March 26: No class  
   
March 31: Theories of Government
 

 Reading: 

 North, D. 1990. "A Transaction Cost Theory of Politics"  Journal of Theoretical Politics 1990; 2(4); 355-367.
     
   

Milgrom, P., D. North, and B. Weingast 1990. "The Role of Institutions in the Revival of Trade: The Law Merchant, Private Judges, and the Champagne Fairs." Economics and Politics 2(1):1-23.
     
   

North, D. 1991. "Institutions" The Journal of Economic Perspectives, 5(1): 97-112.
     
   

North, D. 1994. "Economic Performance Through Time" The American Economic Review, 84(3): 359-368.
     
   

North, D.  2003. "Instituitions, Transaction Costs and Economic Growth" Economic Inquiry,  XXV: 419-428.
     
     
April 2: Side Bar on Voting  
 

Reading: 

 Feldman, A. 1980. "Arrow's Impossibility Theorem." Chapter 10 in Welfare Economics and Social Choice Theory. Kluwer-Nijoff Publishing.
    Stiglitz, J. 2000. "Public Choice." Chapter 7 in Economics of the Public Sector., Third Edition. Norton
     
Section V: Public Administration and Public Management as Principal-Agent Arrangements
 
April 7: Public Administration as a P-A Challenge
 

 Reading: 

 Lane, Introduction and Chapter 1
     
    Barry, D. and H. Whitcomb. 2005. "Origin and Development of the Administrative Process." Chapter 2 in The Legal Foundations of Public Administration, Rowman and Littlefield.
     
April 9: Who is the Principal?  Who is the Agent?
 

 Reading: 

 Lane, Chapter 2
     
    Cann, S. 2006. "Legislative Control of Bureaucracy" Chapter 3 in Administrative Law, 4th ed., Sage.
     
    McCubbins, Mathew, Roger Noll, and Barry Weingast. 1987. "Administrative Procedures as Instruments of Political Control.."  Journal of Law, Economics & Organization 3(2): 243-277.
     
    Weingast, Barry. 1984. "The Congressional-Bureaucratic System: A Principal Agent Perspective (with Applications to the SEC). Public Choice 44: 147-191.
   

April 14

 The Role of Government
 

 Reading: 

 Lane, Chapter 3
     

April 16:

 Rationality in Government
 

 Reading: 

 Lane, Chapter 4

 

 

  

 

 

  

April 21:

 The Role of Law
 

 Reading: 

 Lane, Chapter 5

 

 

 

April 23:

 Public Firms
 

Reading: 

 Lane, Chapter 8
     

 

 

  
   

  

THIS SYLLABUS IS SUBJECT TO REVISION AND SHOULD ALWAYS BE CONSIDERED TO BE IN DRAFT FORM. CONFIRM DEADLINES IN ADVANCE.