ECO 481: Public Choice Theory

Slides:

Advertisements

Similar presentations

Chapter 2 Economic Systems.

Advertisements

Economic Systems Ohio Wesleyan University Goran Skosples 5. How a Market System Works.

SECTION 1 MANAGING THE ECONOMY Market Failure The economy at work GCSE ECONOMICS: UNIT 12.

Providing Public Goods

Government Goals & Policy

SMART Classes First Year Chapter (2) The Modern Mixed Economy

ECO 481: Public Choice Theory Week 1 – Introduction to Public Choice Dr. Dennis Foster , FCB #308 Office Hours –Wed: 1:00 pm - 5:00 pm; and by.

1. People can’t have everything they want, so they choose. 2. People make better decisions when they weigh the present and future benefits and costs of.

STATES AS THE PROBLEM The Predatory State 1. Power to Protect Property = Power to Take Property 2. Fiscal Illusion (citizen’s limited information) Accountability/Responsiveness.

Managerial Economics and Organizational Architecture, 5e Managerial Economics and Organizational Architecture, 5e Chapter 21: Understanding the Business.

HW RB, p.14/VI 1 economic2 economic 3 economy4 economic 5 economical6 economic 7 economy8 economics 9 economical10 economy 11 economical12 economy 13 Economics15.

American Free Enterprise

Examine the role of the government in the US economy. The US is a mixed economy with private and public sector. The government has a crucial role in finding.

Economic Decision Makers ECO 2013 Chapter 3. Households Play a starring role in a market economy Determines what gets produced Supplies labor, capital,

An Introduction to regulation, it ’ s significance and rationale Kevin Hinde.

Chapter 15 Government’s Role in Economic Efficiency ECONOMICS: Principles and Applications, 4e HALL & LIEBERMAN, © 2008 Thomson South-Western.

ECO 481: Public Choice Theory Week 5 – Part I: Free & Forced Riders Part II: Private Property Dr. Dennis Foster.

American Free Enterprise. The Benefits of Free Enterprise.

AP Macroeconomics Chapter 4: Adding the Government to the Economic Equation.

ECO 481: Public Choice Theory Week 5 – Part I: Free & Forced Riders, Dr. Dennis Foster.

ECO 481: Public Choice Theory Week 7: Producer Rigged Markets & Consumer Protection Dr. Dennis Foster.

Economic Systems… Combination of various agencies, entities that provide the economic structure that defines the social community. Involves the production,

The Role of Government in a Market Economy. 1. Provide a legal system Make and enforce laws and to protect private property rights. Make and enforce laws.

ECO 481: Public Choice Theory Week 7: Producer Rigged Markets & Consumer Protection Dr. Dennis Foster.

1 Economic Systems Engineering Economics Lecture January 2010  Economic Systems  Production Possibilities Frontier (PPF)

ECO 481: Public Choice Theory The Rationale for Government Dr. Dennis Foster.

ECO 481: Public Choice Theory Introduction to Public Choice Dr. Dennis Foster , FCB #308 Office Hours – Wed. 1:00 pm - 5 pm; and by appointment.

Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

People and Government Chapter 1. Principles of Government Chapter 1 Section 1.

Free Enterprise  Another name for capitalism, an economic system based on private ownership of productive resources  Open opportunity: ability of everyone.

Market Failure Monopoly Public Goods Merit & Demerit Goods Externalities.

Free Enterprise. How does Free Enterprise answer the 3 Economic Questions? 1.What goods will be produced? sellers decide: what are consumers willing and.

WHAT ROLE DOES THE GOVERNMENT PLAY???. WHAT DOES THE GOVERNMENT PROVIDE FOR IN A MARKET ECONOMY? The government provides goods and services such as military.

II. SOURCES OF MARKET FAILURE. E. Merit goods & the unacceptability of Individual Preferences 1. Religious and humanist impulses 2. Aesthetic, artistic.

Copyright 2008 The McGraw-Hill Companies 4-1 Households as Income Receivers Households as Spenders Business Population Legal Forms of Business The Public.

Lectures in By Prof. Dr. Younis El Batrik. THE FIELD OF PUBLIC FINANCE Fundamental Economic Facts  The Scarcity of Resources  The necessity of economizing.

CHAPTER TWO REVIEW. 1.An _________ is the method used by a society to produce & distribute goods and services. 2.In order for a society to decide the.

The Individual, The Government, and Mixed Markets Limited Government.

Copyright © 2005 Pearson Education Canada Inc.10-1 Chapter 10 The Public Sector.

WHEN MARKETS FAIL Chapters 7 1. Important Definitions: 2  Definition of Government:  Institutions to which people give over a monopoly of violence in.

Chapter 4 The U.S. Economy: Private and Public Sectors

Adam Smith and the “invisible hand” markets in a modern economy

ECO 481: Public Choice Theory

ECO 481: Public Choice Theory

Problem Set #6 Points Distribution

ECON 411 Public Sector Economics PowerPoint Material 2017

ECO 481: Public Choice Theory

Public Goods and Public Policy Promoting Competition Income Inequality

ECO 481: Public Choice Theory

Market Failure (?): Public Goods & Common Property

Market Structures and Market Failures

PUBLIC GOODS AND EXTERNALITIES

The U.S. Private an Public Sectors

Economics Vocab ppt.

International Economics

4 The U.S. Economy: Public and Private Sectors.

Acquire knowledge of the impact of government on business activities to make informed economic decisions 5.04.

PUBLIC GOODS AND EXTERNALITIES

Basic economic systems Command economy Vs. Free Market Economy

Problem Set #6 Points Distribution

Types Of Legal Business

Role of the state.

ECO 481: Public Choice Theory

ECO 481: Public Choice Theory

Characteristics of Free Enterprise

4 The U.S. Economy: Public and Private Sectors.

ECO 481: Public Choice Theory

ECO 481: Public Choice Theory

Lindquist Economics CH 7.3

Topic 4: Competition and Market Structure

Presentation transcript:

ECO 481: Public Choice Theory The Rationale for Government Dr. Dennis Foster

Market Failure Non-excludable & non-rival. Free rider problem. The Case of Public Goods: Non-excludable & non-rival. Free rider problem. Private markets will “underprovide.” Graphical representation. The Case of Negative Externalities: Private markets will “overprovide.”

Welfare Economics Market is not exhausting all advantageous trade Sources of market failure: Market is not exhausting all advantageous trade Public Good & positive externality. Negative externalities. Information problems. Market instability. Policy prescriptions: Persuasion/Regulation/Gov’t Expenditure

Rethinking Market Failure The Market Process: The coordination of activity. What do people want? The competing use of scarce resources. How much is right? The role of prices. The role of profit & loss. I, Pencil and Milton Friedman’s version. [Or, toaster.] Markets need . . . stable legal structure (?)

Assessing Market Failure Public Goods: How much is right? The “well balanced” transportation system. How do you finance? Free rider is replaced by “forced rider.” Does that really alleviate this “problem?” Should any good with MC=0 be provided? How would the market respond? Bus vs. cab example.

Assessing Market Failure Imperfect Competition & Information Issues: Monopoly harm . . . to whom? Is there such a thing as “predatory pricing?” Monopoly shortcomings & government. Political response of anti-trust laws. Can we actually have perfect information? Hayek and the market process.

Is this Market Failure? Markets reward contribution, not effort. Distribution Issues: Markets reward contribution, not effort. Is there an “arbitrary distribution of natural abilities?” Star Parker - what does gov’t redistribution do? How many are on food stamps? Who benefits from food stamps?

Case Study – Food Stamps

Enrollment by month, 2008-2018 Jan. 2018 45.6 mill. Jan. 2008

Enrollment by year, 1975-2016 2016 44.2 mill. 1975 17.4 mill.

% Population Enrolled, 1976-2016 13.5% 1976 8.5%

Total benefits paid, 1969-2016 2016 $67 b. 1970 $1 b.

Federal cost of program, 1969-2016 $4.4 b. 1970 $50 m.

Who participates, % by race; 2016 Yet, room for the private sector!

Market Failure Standardizing - weights and measures. Transaction Costs & Regulation: Standardizing - weights and measures. Can’t markets reduce these costs? Do regulations really reduce these costs? Stossel video (Institute for Justice) Coyote blog Toys Do businesses like to compete?

ECO 481: Public Choice Theory The Rationale for Government Dr. Dennis Foster