Political Economy (course)

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Political Economy.


1. Limits and potential of markets

  • Externalities and public goods
  • The Coase theorem
  • Example: existing markets for pollution permits
  • Theory: a simple “mechanism”

2. Public goods provision

  • Optimal provision (the Samuelson Lindhal condition)
  • Decentralized provision of public goods and free-riding
  • The Vickrey-Clarke-Groves mechanism

3. Voting

  • Arrow’s Impossibility theorem
  • Majority rule
  • Alternatives to majority rule
  • Majority rule and common values

4. Redistribution

  • Normative criteria for redistribution
  • Rent-seeking and lobbying
  • Fairness and redistribution

5. Federalism

  • Normative criteria for federalism
  • Distortions
  • Geographic federalism vs. functional federalism