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3.1. Scope of Government: Objectives and Restrictions

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公共经济学

国立高等经济大学

4.7（74 个评分） | 12K 名学生已注册

This course offers an introduction into the public economics theory. It does not aspire to cover theories of taxation, public expenditures, regulation etc. at length and in-depth. Rather, our ambition is to give a bird's-eye view of central themes of public economics and related disciplines, and teach concepts, logic, and ideas, rather than methods of analysis, which would require an entirely different course format. Our choice of topics covered by the course reflects a trade-off between salience and centrality, on the one hand, and suitability for a brief online introductory course, on the other. The course content is neither comprehensive (which would be a "mission impossible" for virtually any public economics course"), nor representative of other such courses. With these limitations and caveats in mind, we encourage our students to continue their public economics studies in a more regular fashion, and see our role inter alia in motivating interest in such "continued education". The central theme of the course is the role of government as a mechanism of resource allocation which complements and augments markets. Governments are viewed as public agencies set to correct market failures. Such agencies however are prone to failures of their own, and hence markets and governments are two imperfect alternatives. We deal with government's limitations, with particular emphasis on those that have to do with informational asymmetry, limited administrative capacity, and imperfect accountability to society. Otherwise the course's man themes are economics of taxation, regulation, politics of public economics, incentives in government, and government vis-à-vis (civil) society. Do you have technical problems? Write to us: coursera@hse.ru

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从本节课中

Scope of Government

In this lecture we discuss how governments perform their key functions such as public regulation and public service delivery using three cases. In the first case, we discuss alternative means to control externalities by considering situations when private firms could cause harm to third parties (employees, customers, local communities etc.). These means include (a) imposing mandatory requirements upon firms to take precautionary measures, (b) allowing damaged parties to sue firms in the court of law, and (c) leaving such incidents to Coase-style private solutions. In the second case, we compare two modalities of public service delivery, namely in-house, by government agencies, or through outsourcing to private sector firms. Finally, we discuss the phenomenon of regulatory capture when wealthy elites unnecessarily complicate and obstruct the entry into the formal sector.

3.1. Scope of Government: Objectives and Restrictions5:25

3.2. Controlling Externalities: Litigation vs. Regulation23:46

3.3. The Role of Administrative Capacity16:20

3.4. Outsourcing of Public Services31:23

3.5. Regulatory Capture19:02

教学方

Leonid Polishchuk
Professor

脚本

[SOUND] Hello. The topic of this lecture is the scope of government. We will be interested in what functions, roles, and responsibilities governments assume upon themselves, what explains such choices, and how these functions are carried out. In a previous lecture, we spoke mainly about taxes, about revenue collection, and more generally about the public finance aspect of the public economic theory. Today I would like to talk to you about some other modes of government's involvement in economies, namely about economic regulation and public service delivery. Another difference between the previous lecture and this one is that last time I presented to you some classical parts of public economic theory that were produced and developed many decades ago. Today I would like to show to you some more recent contributions in public economics that appeared in the literature in the course of the last two decades. The main lesson of this lecture that I want you to remember is that although governments respond to market failures and the role of governments is to fix market failures governments are prone to failures of their own. These failures are due to multiple restrictions that constrain government activities such as informational restrictions, administrative restrictions, and political restrictions. And, therefore, when we choose between government and government alternatives, private or quasi-private we have to bear in mind that we choose between two imperfect options. And if you still follow the normative approach which we'll do for most of this lecture we have to look for second best. We know that asymmetric information is a serious restriction on market forces, and this is one of the main causes of market failures. But just about the same, asymmetric information similarly restricts government activities simply because public servants do not have all the necessary facts that are available to private sector agents. Most effective and efficient of taxes, such as lump-sum taxes, as we saw last time, are not actually feasible options. The same will be the case when governments choose regulation and public service delivery. We remember that the choice of taxes was constrained by administrative restrictions. There are some constraints on administrative capacity of governments. And those prevent governments from choosing and implementing sophisticated and, yes indeed, efficient taxation schemes, and make them to resort to more practical alternatives. The same will be true in the case of regulations. Because government's administrative capacity might be limited, most efficient regulations might not be feasible, and governments will have to resort for something else. The bottom line is that governments choose their involvement in economy between, as I said, imperfect alternatives. And this choice should not be from what is desirable and conceivable. It should be from what is practical, doable, and feasible. As a result, the choice will very rarely be first best. Most of the time, it will be second best. I want to illustrate to you these dilemmas on three cases which are drawn, as I said, from recent literature. The first one is an analysis as to how governments regulate externalities. And the focus of our discussion will be on the choice between two options of regulating externalities. One will be government regulation. Another one will be dealing with externalities by means of courts, courts of law. The second topic will be about public service delivery. Governments deliver their services, public services, by various means, and oftentimes these services are outsourced to private sector firms. That should not be considered as privatization as government still assumes responsibility for such services. The difference is that providers of these services are not government employees, are not government agencies. These providers are private sector firms, which work in contracts with government. Finally, the third topic will be an example of regulatory capture. We will see what happens when regulatory tools are not serving public interests but instead are put under control of some narrow-interest groups, what damage it could cause to the economy, and what corrective measures might be taken to prevent that from happening. [SOUND]

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