Two - Year Master Degree in Economics

Basic knowledge of microeconomics, public economics and mathematics.

This course examines the role of government in modern private economies, focusing on the topic of market failures. Under ideal conditions, competition promotes economic efficiency, leaving little role for the public sector. In some circumstances, however, private markets fail and government intervention to restore efficiency may be desirable. Market failures to be analyzed include public good provision, externalities, imperfect competition, and asymmetric information.

The course will provide the students with an advanced knowledge of standard public economic theory. After attending the course, the student is expected:
• to be able to manage quantitative microeconomic tools to analyse market failure problems and related government interventions;
• to have notions on how public economic theory can be fruitfully applied for undertaking sound empirical analysis of policy making concerning public good provision, market power control, and environmental regulation;
• to learn how to effectively organize ideas mainly in written form, by summarizing, discussing and criticizing the results of academic research in public economics;
• to understand the main building blocks of public economic theory and to acquire the toolkit for undertaking further research work in public economics.

Public economics and economic efficiency:
- Pareto-efficiency of competition and First Theorem of Welfare Economics
- Lump-sum transfers and Second Theorem of Welfare Economics 
Departures from efficiency:
- Public goods
- Club goods and local public goods
- Externalities
- Imperfect competition
- Asymmetric Information

HINDRIKS J., MYLES G.D., Intermediate Public Economics, MIT Press, 2006, chapters 1-2, 5-9.