Public Economics

(3 Credit Hours) · Undergraduate

A belief in efficient markets leaves little room for government economic activities other than the establishment and enforcement of property rights and the redistribution of income to promote social justice. Yet free markets are known in certain situation to fail to achieve an efficient allocation of goods and resources in a society. The first half of the course will examine the conditions when markets can be expected to fail and the alternative policies that governments could follow to promote social welfare. Governments like markets can also fail to adopt policies that efficiently address social problems. In the first half of the course we will also address problems in collective decision-making that can lead to government failures. The second half of the course will be devoted to examining applications of these theories to real world problems. In each of these areas, we will ask how can we justify government intervention; how has the government decided how to intervene; what are the impact of the intervention on economic outcomes; and what alternative interventions should be considered to improve outcomes. The policy areas we will examine will vary from year to year but in the past have been are the formation of a market for body parts (kidneys); sugar subsidies; student loan programs; unemployment insurance; nutritional and housing assistance programs; infrastructure; and guaranteed income programs.