The role of government

Problemslogic of voting or collective behavior eg why

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Unformatted text preview: = when there is no efficient government solution to a problem The problem need not be a market failure; citizens may prefer a governmental solution even when a market solution is possible The “market” for public policy: Demand side: Public preferences ! problems/logic of voting or collective behavior (e.g. why might the government fail to intervene) Supply side: Government action ! agency problems (lack of accountability, self- serving behavior, opportunism, etc. on the part of public officials) When does government step in? Invisible hand perspectives To provide when the market does not or cannot To correct where there is inefficiency To protect property rights Helping- hand perspective: To correct shortages/surpluses To protect vulnerable individuals and groups To reduce poverty Why government failure? BUREAUCRATIC theories: Governments don’t have enough information to correct the problem Government doesn’t have the capacity to correct the problem (intervention in markets is almost always more complicated than it initially seems) The bureaucratic nature of government intervention does not allow precise corrections DEMAND- SIDE the...
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This document was uploaded on 03/28/2014 for the course INAF 252 at Georgetown.

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