财政学英文课件 Chapter 5 Decision Making in the Public Sector.pptVIP

Chapter 5Decision Making in the Public Sector Chapter outline 1．Differences Between the Public and Private Sectors 2．Voting and Public Choice 3．Parties and Platforms 4．The Median Voter Model 5．Addressing the Problem of Government Failure 1．Differences Between the Public and Private Sectors There are four important differences between the private sector and the public sector that can make the public sector less efficient and less responsive than the market: ①Lack of a Residual Claimant ②Bureaucrats and Incentives Public agencies do not usually sell their product or services;their revenue stream comes from appropriations and is not tied directly to product quality,output levels,or customer satisfaction. Public choice Niskanen assumes that self-interested behavior will take the form of seeking more power and influence,perks and compensation,and opportunities for advancement in the bureaucracy. James Buchanan assumed government is a Leviathan. ③ Citizens and Rational Ignorance Not enough information is conveyed from citizens to government ;that is ,information, which is itself a public good, is underproduced. And the cost of efforts is greater than the benefits which can be received. In general , rational ignorance has been a very fruitful hypothesis in explaining some forms of government failure. ④Collective Versus Individual Consumption The challenge is how to apportion the cost among the users. The most common solution is to charge a single price for access to the collective good, and let all those who value it at least that much have access to it. But this solution is likely to be inefficient. ⑤ Lack of Revealed Preference Citizens have an incentive to hide their true demand in order to increase their opportunity to free ride. ⑥Measuring and Valuing Output Lack of direct payment makes it difficult to measure and value output. There are three measures of production in the public sector are us