Public
Economics, spring 2012
course
web page
Slides:
introduction to public goods
Public
goods decision processes
Optimal government size: pdf writeup,
Matlab program with Excel graphing companion, Excel calculation
Files for Tiebout
simulation: tiebout.m, evaluate.m, Excel graph of demo
In-class ballot: single-winner
analysis: electionprogram3.m, Excel results
exams for this course posted after
completion: midterm, final
Homework assignments…
Writing
assignment 1 (due Thursday, January 26)
In
your view, what role (if any) should governments ideally play? Under what
conditions can government action improve on private market outcomes? Why? Under
what conditions would you expect government intervention to do more harm than
good? Why? Try to identify value assumptions, logical arguments, and evidence
or experience that influence opinions about the proper role of government.
Problem
set 1 (due Tuesday, February 28)
Click here for the pdf
file.
Writing
assignment 2 (due Tuesday, March 13)
Suppose that a ‘pure communist’ economic
system is one in which there is little or no private property, and the
government has control over all or nearly all economic decisions. Discuss the
advantages and disadvantages of such a system. Is there a version of pure
communism that you find more acceptable than others?
Suppose that a ‘pure capitalist’ economic
system is one in which all or nearly all things of value are privately owned
and controlled, and the only role of the government is to enforce private
property rights. Discuss the advantages and disadvantages of such a system.
If asked, what mixture of these systems
would you recommend? Try to argue that your proposal would possess some of the
benefits of each, and to be honest about the disadvantages that may remain.
You should draw on chapters 1 and 2 of the
text, as well as the material from the class discussions.
Problem
set 2 (due Tuesday, April 24)
Click here for the pdf
file.
Problem
set 3 (not to be collected)
Click here for the pdf
file
Interesting articles
Public goods:
Samuelson, Paul (1954) The Pure Theory of Public Expenditure. Review of Economics and Statistics 36:4,
387-389.
Lindahl taxes:
Lindahl, Erik (1958) Just Taxation -- A Positive
Solution. http://www.econ.ucsb.edu/~tedb/Courses/UCSBpf/readings/lindahl.pdf
Majority rule equilibrium:
Black, Duncan (1948) On the Rationale of Group Decision Making. Journal of Political Economy 56:1,
23-34.
Common resources:
Hardin, Garrett (1968) The Tragedy of the Commons. Science 162:3859, 1243-1248.
Clarke tax:
Tideman, Nicolaus and Gordon Tullock
(1976) A New and Superior Process for Making Social Choices. Journal of Political Economy 84:6, 1145-1159.
Coase theorem:
Coase, Ronald (1960) The Problem of Social Cost. Journal of Law and Economics 3:1, 1–44
Tiebout model:
Tiebout, Charles (1956) A Pure Theory of Local
Expenditures. Journal of Political
Economy 64:5, 416–424
Topics…
1:
markets and governments
efficiency
of ideal markets (1.1), and market failure.
basic
game theory review.
efficiency
and social justice (1.2), anarchy vs. rule of law (1.3).
2:
institutions and governance
political
principal-agent problem: moral hazard, imperfect representation, special
interests vs. public interest, rent seeking (2.1).
government
bureaucracy (2.2).
communism
(2.3).
3:
public goods – non-rival and non-excludable
heterogeneous
preferences for public goods. social optimum, Nash equilibrium, voting with
equal cost-sharing, Lindahl prices
Clarke
tax (3.2.B).
excludable
public goods (a.k.a. natural monopolies) – non-rival but excludable. user
prices (3.2.C).
Tiebout
sorting (3.2.D).
public
goods, taxation, and the size of government (see writeup
above).
5:
externalities
Pigovian
taxes and subsidies.
common
goods – rival but non-excludable. tragedy of the commons.
Coase
theorem.
6.
voting (see election systems list above)
comparing
single winner methods: plurality, runoff, IRV, minimax, Borda, ranked pairs, Benham. strategic voting.
proportional
representation: list PR, mixed member, STV. Hare vs. Droop quotas.
7:
redistribution
Rawlsian,
leaky bucket redistribution.