Public Finance, 3rd Edition

Chapter 1

Introduction to Normative Public Sector Theory

Abstract

Chapter 1 describes the norms that underlie the mainstream economic theory of the public sector and then discusses how these norms dictate the fundamental normative questions within the theories of public expenditures, taxation, and fiscal federalism. The chapter also considers the competing perspectives of public choice and behavioral public finance.

Keywords

Asymmetric information; Behavioral economics; Consumer sovereignty; Decentralized policies; Decreasing cost production; End-results equity; Externalities; Fiscal federalism; Humanism; Pareto optimality; Process equity; Public choice; Two fundamental theorems of welfare economics

Chapter Outline

The Fundamental Normative Questions  ...