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Q. Why does government undertake an economic activity?
If ever an activity has large externality or spill over and includes a large number of people, it may be found better that government undertakes it. As David Hume once pointed out, it is easy for two persons to agree/bargain for terms of draining a field affecting them but it would be very difficult for a large number of persons to make the decision on terms of sharing cost of drainage.
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A change in the legal statute may be able to force an equilibrium if it leads to a new equilibrium which implies some revised belief which sustains the equilibrium. Tirole (1996)
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Public Finance was always dealing with intervention through fiscal instruments, including federal relationships between different tiers of governments and later on it subsumed Publ
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Question 1: "A Policy may be defined as a major course of action within a given environment intended to reach a goal or realize an objective." Give an account of the making
Question 1: (a) Describe and distinguish between the Linear Stages Theory and the Structural Change Models. (b) What are the limitations of each of the above two models.
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