The second edition of Public Finance and Public Policy retains the first edition's themes of investigation of responsibilities and limitations of government. The present edition has been rewritten and restructured. Public choice and political economy concepts and political and bureaucratic principal-agent problems are introduced at the beginning for application to later topics. Fairness, envy, hyperbolic discounting, and other concepts of behavioral economics are integrated throughout. The consequences of asymmetric information and the tradeoff between efficiency and ex-post equality are recurring themes. Key themes investigated are markets and governments, institutions and governance, public goods, public finance for public goods, market corrections (externalities and paternalist public policies), voting, social justice, entitlements and equality of opportunity, choice of taxation, and the need for government. The purpose of the book is to provide an accessible introduction to the use of public finance and public policy to improve on market outcomes.

Author Biography

Arye L. Hillman is William Gittes Professor of Economics at Bar-Ian University in Israel. He has taught at Princeton University and UCLA and has been a guest lecturer at universities around the world. Professor Hillman received his Ph.D. in economics from the University of Pennsylvania. His professional papers include research under the auspices of the International Monetary Fund and the World Bank. He is a former president of the European Public Choice Society. Professor Hillman was jointly awarded the Max Planck Prize in Economics for his contributions to political economy.