31.01.2024 Summary#

Main Questions

  1. When should Government intervene?

  2. How?

  3. Effect of interventions

1. Motivations#

  • correct market failure (more efficiency)

    • externalities

    • public goods

    • asymmetric information

  • reduce inequality (income, wealth, opportunity)

2. Interventions#

  • regulation

  • taxation

  • subsidies

  • (nudges)

3. Effects#

Theory:

  • model individual decision making

  • find equilibrium

  • find size of effect

4. Why the way they do?#

Field of Political Economy

  • How decisions come about

  • government failure