ECC4810

The economics of collective choice

Dr Keith Jakee

7 points · One 3-hour session per week · First semester · Clayton · Prerequisites: ECC4650 and ECC3810 or equivalents

Objectives This subject is designed to give students an introduction into the issues and analysis of collective decisions. More specifically, it should enable students to become more discriminating observers of the political and policy environment. We will not only review market failures, but consider the potential for solving these failures in the collective, or political setting. Problems of free-riding, incentives to vote, interest group influence, bureaucratic behaviour and constitutional frameworks are a few of the issues that we will examine. The economist's role in the process of formulating public policy is considered throughout.

Synopsis Collective decisions permeate our social existence as a result of ubiquitous externalities and public goods. While the efficiency properties of these so-called market failures are much discussed by economists in the standard public finance literature, the analysis of real decisions concerning these collective matters is often ignored. Also known as political economy, public choice, or the economics of politics, we will focus specifically on models of decision-making in the collective setting, utilising a number of tools, some of which will be familiar microeconomic ones, others will be newly introduced. The overall theme is to sensitise students to the various economic approaches one can take to collective decision environments, which are broadly categorised as new welfare economics, the Chicago and Virginia Schools. Whenever possible, Australian policies will be examined in light of theory.

Assessment In-class: 30% · Examination (2 hours): 70%

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