A Course in Public Economics, first published in 2004, explores the central questions of whether or not markets work, and if not, what is to be done about it. The first part of the textbook, designed for upper-level undergraduates and first-year graduate students, begins with an extended discussion of the two theorems of welfare economics. These theorems show that competitive markets can give rise to socially desirable outcomes, and describe the conditions under which they do so. The second part of the book discusses the kinds of market failure - externalities, public goods, imperfect competition and asymmetric information - that arise when these conditions are not met. The role of the government in resolving market failures is examined. The limits of government action, especially those arising from asymmetric information, are also investigated. A knowledge of intermediate microeconomics and basic calculus is assumed.
• Explains economic theory at a level understandable to senior undergraduates • Illustrates the use of mathematics in economics and teaches problem-solving skills • Contains practice problems at the end of every chapter; solutions to all problems are available to instructors
Part I. Markets; Section 2. The Exchange Economy; Part II. Externalities; Section 6. Externalities and Negotiation; Part III. Public Goods; Section 10. Pure Public Goods; Part IV. Imperfect Competition; Section 14. Monopoly; Part V. Taxation and Efficiency; Section 16. Taxation; Part VI. Asymmetric Information and Efficiency; Section 19. Asymmetric Information; Part VII. Asymmetric Information and Income Redistribution; Section 23. The Distribution of Income.