ECON 1 Lecture Notes - Lecture 8: Nimby, Business Cycle
3 Dec 2020
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Document Summary
Government"s right to coerce whereas private sector activities consist mainly of voluntary transactions. The government can allocate tax revenues to provide subsidies to improve economic efficiency. Problem of managing the government limits this coercion. Poorly designed government policies can misallocate resources for. Government failure- economically inefficient outcomes causes the shortcomings decades. in the public sector. The major impact on government policy is voter interests or to develop a nimby not in my back yard police due to voter preference. Principal agent problems- conflicts that arise when tasks are delegated by one group- principals- to another group (agents). the difference in the interest of the two groups create a failure. Rent seeking is the special benefit received by a group of individuals at the taxpayers expense. Clear benefits and hidden costs- politicians attempt to obtain the immediate and easily identifiable costs but with the less measurable results.
