econ434notes35c

econ434notes35c - Public Choice Literature -government is...

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Public Choice Literature - government is too big Functions of government: 1) Public Goods a) non-rival b) non exclusive Examples include defense, courts, and the police. 2) Transaction costs 3) Informational problems a) Asymmetric information b) Monopoly Hatch-Waxman act- excludes weight loss drugs and “natural herbs,” etc., from regulation Type 1 vs. Type 2 error tradeoff Type 1 error Type 2 error Type 1 error = keep bad drugs off market, but would end up keeping god drugs off the market as well. Type 2 error – allow more drugs more bad drugs are present in the marketplace Coase Theorem
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- what matters is that people have property rights example: marketable pollution rights for sale Richard Musgrave -Came up with three budget approach to government
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econ434notes35c - Public Choice Literature -government is...

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