POLI 101 Lecture Notes - Market Failure, Direct Market
Document Summary
Lectures up to now will be posted this week. Existence of market failure shows that the market outcome (no govt intervention) is not optimal; there is some potential benefit of govt action. Cba a set of techniques for putting monetary values on the benefits and costs of public policies to decide which ones are warranted. Major elements: actual spending by the government; financial costs to citizens or businesses of complying with regulations. Some costs are harder to measure, much like some of the benefits (e. g, a welfare program, supplementing income of low-income families, may discourage employment). The easiest case: government produces some benefit that is already bought and sold in a market, with indentifiable prices. E. g. government builds a dam, which will produce electric power. Benefits of electric power is simply the price that people are already paying for the amount of power. Or govt has training program for low-income people.
