Public Economics

4.0 credits

The course examines the role of the government in the economy, answering "why", "when", and "how" it should intervene. We begin with the "why", exploring normative approaches to resource allocation through welfare economics, distributive justice, and bargaining theory, establishing efficiency and equity as key government objectives. To address the "when", we analyze the benchmark case of competitive markets and the welfare theorems, followed by an exploration of various market failures (externalities, public goods, market power, asymmetric information). We then study the government's tools for intervention, both in markets (taxes and quotas) and beyond markets (regulations and institutions). Since these tools reshape incentives, the "how" focuses on understanding the responses of economic agents to government actions. Drawing insights from public finance, labor economics, and political economy, we distinguish between mechanical and behavioral changes and explore government failures. Finally, we integrate these elements to build a positivist framework for assessing the quality of public policies based on government normative objectives.