فصل اول بخش 2
When
Should the Government Intervene in the Economy?
•Even if the market is well-functioning,
an efficient outcome is not necessarily socially desirable.
•Redistribution is a second reason for
government intervention.
•Redistribution: The
shifting of resources from some groups in society to others.
How Might Governments Intervene?
•Tax or Subsidize Private Sale or Purchase
oUse
the price
mechanism,
changing the price of a good to encourage or discourage use.
•Taxes raise the
price for private sales or purchases of goods that are overproduced.
•Subsidies
lower the
price for private sales or purchases of goods that are under-produced.
•Restrict
or Mandate Private Sale or Purchase
oQuotas restrict private sale of goods that are overproduced.
oMandates
require private
purchase
of goods that are under-produced.
•Public Provision
oThe
government can provide the good directly.
•Public Financing of Private
Provision
oGovernments
pays, private companies produce.
What Are the Effects of Alternative
Interventions?
Interventions
have direct and indirect effects.
•Direct effects: The
effects that
would
be predicted if individuals did not change their behavior in response to the
interventions.
oWith
49 million uninsured, providing universal health insurance covers 49 million
people.
•Indirect effects: The
effects that arise
only because individuals change their behavior in response to the interventions.
oIf
people drop private coverage, many more people may end up covered by the public
plan.
Why
Do Governments Do What They Do?
•Governments do not always choose
efficient or socially desirable outcomes.
•Political economy: The
theory of how the political process produces decisions that affect individuals
and the economy.
Why
Study Public Finance?
The
government is a huge part of the economy:
•Government spending represents a large
sector of the economy, in the United States and around the world.
•This spending is financed with taxes or
with debt, and these affect every facet of the economy.
•Many sectors of the economy are also
directly affected by regulation.
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