Public Goods, Public Choice, and Government Failure

These flashcards cover key concepts related to public goods, public choice theory, government failure, and voting mechanisms, based on the lecture material.

Public Goods

Goods characterized by nonrivalry and nonexcludability that cannot be profitably produced by private firms.

Free Riding

The behavior of benefiting from a good without paying for it, which often leads to underproduction of public goods.

Rivalry

A characteristic of private goods where one person's consumption prevents another person's consumption.

Excludability

The ability to prevent individuals who do not pay for a product from obtaining its benefits.

Government Failure

Economically inefficient outcomes caused by shortcomings in the public sector.

Majority Voting

A decision-making process in democracy that often leads to inefficiencies and may not reflect true public preferences.

Principal-Agent Problem

Conflicts that arise when one group delegates tasks to another, causing potential misalignment of interests.

Special-Interest Effect

When a small group with a particular interest is able to influence government policy despite opposing majority opinion.

Rent Seeking

The appeal to government for special benefits at someone else's expense, resulting in economically inefficient allocations.

Cost-Benefit Analysis

A method of evaluating a project by comparing its marginal costs and benefits to determine if it should be undertaken.

Nonrivalry

A characteristic of public goods where one person's consumption does not reduce availability to others.

Nonexcludability

A feature of public goods where individuals cannot be effectively excluded from benefiting from the good once it is provided.

Quadratic Voting

An alternative voting mechanism allowing voters to express the strength of their preferences by purchasing multiple votes.

Bureaucratic Inefficiency

The tendency of government agencies to operate less efficiently than private businesses due to lack of profit incentives.

Vote Trading

Logrolling; when politicians agree to support each other’s policies to secure favorable outcomes.

Voting Paradox

A situation in which the preferences of voters may not be consistent or transitive under majority rule.

Optimal Quantity of a Public Good

The level of public good production where marginal benefit equals marginal cost.

Collective Demand Curve

A curve showing the total willingness to pay for a public good by summing prices individuals are willing to pay for each additional unit.

Pork Barrel Politics

Government projects that benefit a specific political district at the expense of the broader taxpayer base.

Inefficient Voting Outcomes

Results from majority voting that do not reflect true social welfare, leading to underproduction or overproduction of goods.

Mechanism Design

The study of designing rules or mechanism in economics to improve the likelihood of achieving economically efficient outcomes.