Public economics

Objectives

Public Economics is the study of the role of the State in the economy. This includes the justifications for any economic intervention by the State as well as the design of tools for such an intervention and the study of its consequences. This is a broad sub-field of economics that is at the interstice of many other sub-fields: both at the macro and micro level. We will start by discussing the role of the State from a classical perspective and we will afterwards cover topics that can be of interest to students specializing in health and territories.

Course outline

Chapter 1.
Introduction: The fundamental theorems of welfare and the “early” role of the state
a) Individual endowments: education, taxes
b) Market failures: externalities, public goods, market power
c) Incomplete markets: insurance, repugnant goods

Chapter 2. Consumption of an unhealthy good: Tax incidence and behavioral strategies (“nudges”)

Chapter 3. Externalities, polluting goods and Pigouvian taxes

Chapter 4. Public goods and Lindahl prices

Chapter 5. Information asymmetries: moral hazard, adverse selection and health insurance

Chapter 6. Public choice and market design: matching, allocation mechanisms, kidney exchange and school allocation

Prerequisites

Micro- and macroeconomic modeling, risk economics, algebraic, vector and differential calculus, function analysis (constrained optimization)