Learning outcome

The students should:

• know the criteria for efficient use of resources in an economy
• understand basic welfare theory and issues relating to income distribution
• know the assumptions under which the market outcome leads to efficient use of resources
• be able to describe the main sources of market failure
• know the most relevant policy instruments to alleviate market failure
• know the distinction between neutral and distortionary taxes, and know the basic principles of optimal tax design
• be able to perform basic cost-benefit analyses

Course Description

The course provides a description of the responsibilities and tasks of the public sector, and the causes of growth in the public sector. As a starting point, root causes of market failures will be emphasised. Management problems in the public sector will also be examined. In this context, the border areas between the public and private sectors in relation to various tasks and responsibilities will be considered. Students will also receive an overview of the effects and assessments of various types of taxes and subsidies, and an introduction to cost benefit analysis, including some relevant examples.

Assessment Methods

Written examination, 4 hours.

Minor adjustments may occur during the academic year, subject to the decision of the Dean