3.1. Scope of Government: Objectives and Restrictions

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来自 National Research University Higher School of Economics 的课程

Public Economics

69 个评分

National Research University Higher School of Economics

Public Economics

69 个评分

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.

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

与讲师见面

Leonid Polishchuk
Professor
Department of Applied Economics

[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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