MSc Integrated in Economics
Department of Economics,
School of Social Sciences
DOON UNIVERSITY
SSEI -III Public Economics -I
Credits-03
Monsoon
Semester 2013
Course
Instructor: Siba Sankar Mohanty
Introduction:
The course is designed to
equip students in broad arenas of public finance and some other selected topics
in public sector economics. An emphasis of the course is also on impact
analysis of impact of public policies on resource allocation and distribution
in the economy. In this course, market failure is presented as a justification
for government intervention and public action. At the end of the course,
students are expected to be able to analyse the manner and extent to which
government policies may improve market outcomes through facilitation and regulation.
While the overall emphasis is on the role of public sector of the third world
economies, the students will be exposed to the peculiarities of the Indian
context through assignments and seminars
Evaluation Process:
The evaluation of progress of
students shall be made as per the distribution below
Written (unseen) examinations
: 80 marks (Mid semester 30 marks + final 50 marks)
Seminars and Class
Performance: 5 marks
Assignments /Term Papers: 15
marks
Part-1 The Economic Basis of Government
Activity and Public Economics (Total Number of Contact hours-25)
Market Failure, information and the role
Role of the Government
Markets: The Exchange Economy, the
Edgeworth Box, Pareto Optimality, Competitive Equilibrium, Fundamental Theorems
of Welfare Economics
Exchange Economy: Utility Functions, The
Marginal Rate of Substitution, Pareto Optimal Allocations and Competitive
Equilibrium
The Production Economy: Pareto Optimality,
Competitive Equilibrium with examples, Production Efficiency
Consumer and Producer Surplus, the Welfare
Cost of Intervention, Market Interactions
Externalities: Externalities and
Negotiation, Negotiated Compensation, Negotiation limits, Government
Intervention
Permit Trading: Environmental Pollution and
Abatement, Direct Emissions Controls,
Common Property Resources: Renewable Common
Property Resources, Static and Dynamic Common Property Problem, Extinction
Co-ordination Failures:Co-ordination Game,
Co-ordination Game with Uncertainty
Mid Term Examination
Part-II: Public Goods and Government
Activities: Issues in Taxes (Total
Number of Contact hours-20)
Public Goods: Pure Public Goods, Optimal
and voluntary Provision of a Public Good, Issues in Non-Excludability, Examples
of Pure Public Goods, Knowledge, Income Redistribution, Impure Public Goods,
Variable-Use Public Goods
The Link between Public Goods and
Externalities: Interdependent Preferences: Indifference Curves and Pareto
Optimal Allocations, Goods with Positive and negative externalities
Market Srtuctures: Imperfect Competition,
Natural Monopoly, Rent-Seeking Behaviour, Pricing Rules under Imperfect
Competition, Marginal Cost Pricing, Differentiated and Undifferentiated Goods,
Marginal Cost Pricing and Economic Efficiency
Taxation and Efficiency: Taxation, The
Welfare Cost of Tax Interactions - Welfare Cost Calculations, The Theory of the
Second Best, Optimal Taxation, Natural Monopoly and the Ramsey Pricing Rule
Final Examination
Assignments, Seminars and Projects
(1)
Essay on Market failure (5
Marks): All the students are required to write an essay on one of the real life
examples of market failure that they consider important. While the essay may be
based on the examples of real life, they also need to refer to books and
scientific literature available on the topic. The tentative deadline for the
assignment is 15th September 2013
(2)
Debate (5 Marks): Students need
to participate in a debate on a topic suggested by the course instructor. The evaluation
of students will be made on the basis of numbers of posts made by the students
on the topic, feedbacks of fellow students on those posts and the expression of
original thinking suggested in those posts made by the students. Deadline for
the last post is 20th November 2013. Post can be made at http://lokkatha.com/150/index.php/forum/economicsandeconomy
. Students need to register as users in order to help me moderate the posts and
comments.
(3)
Quiz (5 Marks): Students need to take a quiz on
public economics as directed by the course instructor.
References
Textbook (Mandatory): John Leach , (2004) A Course in
Public Economics , Cambridge University Press
This is a must textbook as the course outline is based on the flow of the contents in the book. Students have sufficient copies of the book in the library. So please go through the book for relevant parts of the book before coming to the class.
Suggested Reading List
1. Bowers, P.F. (1974): Private Choice and
Public Welfare, Dryden Press, NY.
2. Buiter, W.H. (1990): Principles of
Budget and Fiscal Policy, MIT Press.
3. David, N. and Nicholas, S. (eds.)
(1987): The Theory of Taxation for Developing Countries, OUP.
4. Hyman, D.N. (2007): Public Finance: A
Contemporary Application of Theory to Policy, Thomson Asia Pvt. Ltd.,
Singapore.
5. Jha, Raghbendra (1987): Modern Theory of
Public Finance, Wiley Eastern, Delhi.
6. Maxdowell, A., Anderson and J. Richard
(1973): Financing State and Local Governments.
7. Musgrave, Richard A. (1959): The Theory
of Public Finance, Tata McGraw Hill, N.Y.
8. Mishra, B. (2006): Economics of
Taxation: Theory and Application, Akansha Publishing House, ND.
9. Prest, A.R. (1975): Public Finance in
Theory and Practice, Weidenfeld and Nicholson, London.
10. Ursula, H. (1968): Public Finance, James Nisbet and Co., London.
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