The Role of Government

Harvard FAS

Economists have a very positive view of the role of markets. The intellectual foundations of this are the first and second theorems of welfare economics. The purpose of the seminar is to introduce the students to these results but also to their limitations. Most economists think that market outcomes will fail to be efficient in the presence of large-scale externalities/public goods, and government intervention is then justified.Examples are national defense, clean air, and the mother/father…