This course provides a basis for the economic analysis of public policy issues.
It analyzes the role of public sector in the economic system, its functions,
management techniques, public goods provision, methods of efficiency
evaluation, methods of equity evaluation.
Stiglitz J., Economia del settore pubblico, Hoepli.
Learning Objectives
The main aim of the course is to develop analytical tools and their application to
key policy issues relating to the decision activities of the
government. After studying the course students should know main theoretical
concepts and models, be able to analyze the influence of public
spending on the economy, discuss different questions, connected with public sector economics.
Prerequisites
Basic microeocnomics
Teaching Methods
Lectures
• Classes
• Tutorials
• Self study tasks
• Writing of the essay
Further information
Students attendance to the course is strictly recommended.
Type of Assessment
Written exam; a written essay to be presented to the class; computer lab.
Course program
Pareto efficiency versus alternative criteria. Equity and efficiency. Defining
a social welfare function. Alternative theories of the role of the state. Vertical
equity and horizontal equity. Redistribution and its effects. The Lorenz curve.
Market Failure
The first and the second fundamental theorems of welfare economics. Source of market failure: competition failure, incomplete markets, information failure,
externalities, public goods. The theory of externalities. Private bargaining
solutions versus government intervention. Pigovian taxes. Alternative government
policies for pollution control. Coase theorem. The theory of public goods.
Efficiency conditions for public goods. Lindahl equilibrium. Second-best principle.
Public Choice
Public mechanisms for allocating resources: problems of eliciting preferences
and reconciling differing views. Majority voting: the median voter theory and the voting paradox. Arrow’s Impossibility Theorem. Special interest groups.
Rent-seeking behaviour. Theory of bureaucracy. “Principal — agent” problem. Government failure.
Applied public economics.
Introduction to the Open Notebook Science (LAB)