Course approved by Faculty Senate.


University Studies Course Approval

Department or Program: Economics
Course Number: 320
Semester Hours: 3
Frequency of Offering: Once per academic year
Course Title: Business-Government Relations

Catalog Description: Government economic regulation of business including antitrust legislation, natural monopoly regulation, and selected social regulation topics such as consumer product safety. Prerequisite: ECON 201.

This is an existing course previously approved by A2C2: Yes

This is a new course proposal: No

Department Contact Person: Dan Kauffman Email:

University Studies Approval is requested in: Unity and Diversity - Democratic Institutions

The University Studies Program states that part of the purpose of the Democratic Institutions requirement is to provide students with a basic understanding of the legitimate scope of government in a democratic society. In that regard I quote the following from the Summary Course Description on the attached sample syllabus. "The purpose of this course is to examine the why and how of government intervention in the capitalist market (free enterprise) system." The sample syllabus also points out in which parts of the course at least five of the seven outcomes for democratic institutions courses (a-g below) are addressed. The syllabus is included in this application for purposes of illustration. One member of the economics faculty (Dan Kauffman) typically teaches this course, but things can change and each faculty member is responsible for his/her own course syllabus.


As required by the approval process, the following address at least five of the seven outcomes listed for Democratic Institutions courses and documents course content and learning activities relevant to the course outcomes:

  1. understand the principles upon which democratic governments are based

    A case can be made that democracy and capitalism are inherently intertwined (see Milton Friedman's Capitalism And Freedom). Indeed, so the argument goes, democracy cannot function in the absence of capitalism. If you buy this argument, and perhaps even if you do not, knowing the basics of how the institution of the capitalist market functions is part of the foundation for knowing how democracy functions. An early segment of Business-Government Relations reviews the basic mechanics of the market under the premise of laissez-faire, an economy with a minimal role for government in the market process. For many thinkers laissez-faire entails a significant facet of freedom that is associated with democracy.

  2. understand the problems of democracy and the conditions that favor or disfavor it

    Is the process of capitalism compatible with democracy? And do the results of the capitalist market process serve society's interests? The Business-Government Relations course evaluates the ideal case that can be made for capitalism with regard to process and (especially) results. The course examines the conditions necessary for markets to function ideally and prominent problems with real world markets such as imperfect competition, imperfect knowledge, and externalities. The discussion of problems with the market leads to an evaluation of the role of government within capitalism and eventually to government policy dealing with monopoly (market) power.

  3. identify, state, and justify value judgments related to democratic institutions

    To evaluate the market requires value judgments. To make, on the one hand, the ideal case for capitalism and, on the other hand, to find conditions that disfavor the market entails use of values and ethics. Business-Government Relations begins with a consideration of the values that can be used to judge the market (as well as government policy and even non-market economies). Values such as freedom, equality, welfare and happiness, and progress are put into an economic context and applied to both the market and government policy. Two ethical forms of reasoning are also introduced and applied to evaluations of the market and government policy. In addition, the two prevailing current major economic philosophies, conservative and liberal, are also discussed.

  4. understand the nature of non-democratic institutions

    The antithesis of capitalism and democracy is socialism/communism. Business-Government Relations is essentially about problems with the market and government regulation related to market power -- it is not a course in comparative economic systems. However, brief reference is made to other economic systems as an alternative to the capitalist approach to scarcity.

  5. understand the implications of taking responsibility for the consequences of their own actions for democratic institutions

    John Stuart Mill once noted that individual freedoms stop at the tip of another person's nose. Mill, a famous nineteenth century economist and son of a famous economist, anticipated the issue in contemporary economics known as externalities. Externalities complicate the merits of laissez-faire capitalism and open that squeaking door to government intervention into the exercise of private, individual rights within capitalism. Imperfections in competition and in knowledge also open that door. When individuals (persons or businesses) have economic power their actions may not produce the best results for society. Likewise, when information is imperfect the interaction of demanders and suppliers may produce less than desirable social results. Business-Government Relations evaluates the consequences of individuals and businesses taking action in their own interest and the circumstances when this may not be compatible with the public interest. (Is Bill Gates an economic devil and Microsoft his evil empire?) The course also spends considerable time on government policy (e.g., antitrust) to control and/or channel individual actions toward the public interest.




  6. understand the relation of equal rights to democratic institutions

    A simple political notion of equal rights under democracy is one-person one-vote. Equality under capitalism can be approached from other dimensions. Is economic power (e.g., in bargaining) equally distributed? Should it be? Should society go beyond equal economic opportunity and try to achieve equal economic results? Should equality be traded-off for increased efficiency? Does such a trade-off exist? What is government's role with respect to economic equality? Business-Government Relations briefly considers the one-person one-vote dimension of democracy and deals more deeply with these other facets of capitalism.

  7. understand the need to exercise responsibility for the expression of their ideas

When a business advertises its product it is a form of expressing ideas. But capitalism can malfunction when information is imperfect. On occasion a firm may not disclose pertinent information about its product, and at other times its advertising may be false (i.e., deceptive). A portion of Business-Government Relations deals with the theory of how markets malfunction when information is imperfect, and with government policy controlling aspects of business responsibility for expressing its ideas.




Instructor: Dan Kauffman

Office: SO324P

Office Hours: MWF 11-12 noon & M 3-4 p.m., TH 9:30-12:30 p.m., or by appointment

Office Phone: 457-5195


The purpose of this course is to examine the why and how of government intervention in the capitalist market (free enterprise) system. After a discussion of the values that could be used to judge the institution of the market, problems with the private free enterprise market will be examined. This will lead to a consideration of government policies to counteract the shortcomings of the market. The principal areas of concern are artificially attained monopoly power and the related government antitrust policy to control it, and natural monopoly and government policy to directly regulate it.

SELECTED COURSE OBJECTIVES bulletTo acquaint students with values that could be used to judge the operation of the market (or government). bulletTo acquaint students with the economic arguments, pro and con, for government intervention in the market economy. bulletTo acquaint students with some of the major pieces of government legislation (policy) that control market (business) activity and with the application of this legislation to selected case situations. bulletTo develop student's ability to apply the concepts, theories, and government policies discussed in the course to new situations that entail a different set of circumstances.


This course offers three semester hours related to Democratic Institutions and thus fulfills the requirement in the Unity and Diversity section of the University Studies Program pertaining to Contemporary Citizenship or Democratic Institutions. As such, it seeks to include requirements and learning activities that promote students' abilities to…

  1. understand the principles upon which democratic governments are based
  2. understand the problems of democracy and the conditions that favor or disfavor it
  3. identify, state, and justify value judgments related to democratic institutions
  4. understand the nature of non-democratic institutions
  5. understand the implications of taking responsibility for the consequences of their own actions for democratic institutions
  6. understand the relation of equal rights to democratic institutions
  7. understand the need to exercise responsibility for the expression of their ideas

The course outline below identifies where these University Studies Program outcomes are addressed by placing the letter references above in bold parenthesis.


D. Greer; Business, Government, and Society; 3rd. Ed., 1993; Macmillan (Prentice Hall)


I. Values, the Market, and the Role of Government

Chapter 1 - Introduction: Functions and Values (a, c, d, f)

Chapter 2 - The Market: Ideal and Real (a, b, c)

Chapter 3 - Government Policy: Ideal and Real (a, b, c, d, f)

Chapter 4 (pp. 63-71) - Philosophical Background (a, b, c, e, f)

Exam 1

II. Introduction to Antitrust Policy, Collusion, and Monopolization

Chapter 5 (pp. 88-103) - Introduction to Antitrust Policy (a, b, c, e, f)

Chapter 6 - Antitrust Policy: Collusive Restraints of Trade (a, b, e, f)

Chapter 7 - Monopolization: Power and Intent (a, b, e, f)

Exam 2

III. Mergers, Price Discrimination, Tying, Exclusive Dealing, Territorial Restrictions, and RPM

Chapter 8 - Merger Policy (a, b, e, f)

Chapter 9 - Price Discrimination: The Robinson-Patman Act (a, b, e, f)

Chapter 10 - Vertical Market Restrictions (a, b, e, f)

Exam 3


As time allows we will cover some or all of part IV below.

IV. Information Policy and an Introduction to Social and Public Utilities Regulation

Chapter 12 - Product Standardization and Information Disclosure (a, b, e, g)

Chapter 13 - Unfair and Deceptive Practices (a, b, e, g)

Chapter 20 - Safety, Health, and Pollution Regulation: An Overview (a, b, e)

Chapter 14 - Introduction to Economic Regulation (of Natural Monopoly) (a, b, e)

Exam 4



Initial plans are for three or four required exams as outlined above. Exam dates will be announced about a week ahead. The final exam period will be used for Exam 3 or Exam 4 depending on the amount of material covered. Each exam will probably have about 130 total points.

Arrangements should be made to take any make-up exam before the original is given. Only in documented emergency situations will a make-up exam be given if arrangements have not been made before hand.


On each exam, and for the course grade, the following percentages of total points will, at maximum, apply:

90 - 100% = A

80 - 89% = B

60 - 79% = C

50 - 59% = D

Less than 50% = F




Extra credit can be earned by applying any of the terms, concepts, models, policies, etc. found in the course toward an analysis of current events on business-government topics. Any number of regular sources may be used, such as The Wall Street Journal, Business Week, Time, and the Minneapolis Star and Tribune. Some very good material on the Internet can also be used – I will provide some addresses.

The extra credit is for analysis. Do not spend any time summarizing articles. Provide me with a copy of (or identify the Net address for) any "article" you intend to analyze and put your efforts into the analysis. Examples of analysis will be provided in class. The extra credit has no magic number of points. You can analyze as many articles as you wish. The quality (and quantity) of your analyses will be used primarily in borderline grade cases.


Winona State students are required to adhere to WSU's standards of academic honesty. Cheating in any form, deception and misrepresentation of work presented, and plagiarism are a few examples of academic dishonesty. Information regarding this Student Conduct Policy can be found on the Student Affairs web site at A visit to that site would be advantageous.