WEEK1
Rolesofthegovernment
Allocative
Redistributive
stabilisation
4 shouldbetoaddressmarketfailure
Allocative
AdamSmitharguesselfinterestleadstoefficientmarkets
BUT
there maybemarketfailure
pricesreflect
opportunity
cost
FundamentalTheoremofwelfareEconomics
allpossibilities oftradeexhausted
ifParetoimprovementwerepossible
itwouldhappen
arbitrage I
efficiencycanbeachievedafterredistribution
, I
rationality
perfectinformation
y efficientmart
withanyviolation therewillbemarketfailure
t
notParetooptimal
cantbeprovidedBY
f
inefficient
privatesector toexclude
Limitationsofgoutintervention
,stage of development Wegner's law Baumol'sLaw
privatetech publictech
goutspendingweep
risingafterspikes
g
observeoutput
Bureaucracy peoplecan'taccurately
t bureaucratsknowthetruecost
Niskanen willpressuretopbudget
assumes noaudits absenceofcompetition
, WEEK2
VOTING
individual collectivepreferences
exist
Arrow'simpossibilityTheorem perfectcollectivedecision makingruledoesn't
Unanimity
ALLneedtoagree
otherwise ther'sPareto improvingdecisionspossible
time consuming ifmanychoices
maynotalwayswork
vulnerabletostrategicbehaviour
rich canbebetter
y parts t
improvement offw omaking
anyoneworseoff
a
E z
s
Upoor
ritericfor goodcollectivedecisionmakingmechanism Arrow'simpossibilityTheorem
Rolesofthegovernment
Allocative
Redistributive
stabilisation
4 shouldbetoaddressmarketfailure
Allocative
AdamSmitharguesselfinterestleadstoefficientmarkets
BUT
there maybemarketfailure
pricesreflect
opportunity
cost
FundamentalTheoremofwelfareEconomics
allpossibilities oftradeexhausted
ifParetoimprovementwerepossible
itwouldhappen
arbitrage I
efficiencycanbeachievedafterredistribution
, I
rationality
perfectinformation
y efficientmart
withanyviolation therewillbemarketfailure
t
notParetooptimal
cantbeprovidedBY
f
inefficient
privatesector toexclude
Limitationsofgoutintervention
,stage of development Wegner's law Baumol'sLaw
privatetech publictech
goutspendingweep
risingafterspikes
g
observeoutput
Bureaucracy peoplecan'taccurately
t bureaucratsknowthetruecost
Niskanen willpressuretopbudget
assumes noaudits absenceofcompetition
, WEEK2
VOTING
individual collectivepreferences
exist
Arrow'simpossibilityTheorem perfectcollectivedecision makingruledoesn't
Unanimity
ALLneedtoagree
otherwise ther'sPareto improvingdecisionspossible
time consuming ifmanychoices
maynotalwayswork
vulnerabletostrategicbehaviour
rich canbebetter
y parts t
improvement offw omaking
anyoneworseoff
a
E z
s
Upoor
ritericfor goodcollectivedecisionmakingmechanism Arrow'simpossibilityTheorem
