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A Framework for Efficient Government Investment, Andrew Warner

Welfare economics, scope and performance of government, externalities, public goods, cost-benefit analysis, subsidies economize on spending without losing effectiveness by modifying the conceptual framework guiding state expenditures. The familiar framework says that state intervention is justified when the spending provides public goods or when the intervention addresses externalities, provided the social return is above a threshold. This paper argues that another consideration needs to be brought into the mix - whether, in spite of the externalities, the private sector has an incentive to undertake the activity. It is argued that these two considerations together define a more efficient framework under which to justify state intervention. According to this modified framework, even a benign state interested in social welfare would not in fact address every externality nor necessarily select expenditures with the highest social returns. These points are summarized in a graph which is then used to analyze policy rules, subsidies and effective interaction between the state and the private sector. It is hoped that this paper points to the kind of information that needs to be collected and acted upon so that states may achieve their goals more effectively
Table Of Contents
Cover; Table of Contents; I. Introduction; II. A Graph of Possible Investments; Figures; 1. Illustration of Private and Social Rates of Return for Investments; III. Decision Rules for State Investments; 2. Six Possible Investments - Which Should the Public Sector Do?; IV. Do Externalities Always Justify Intervetion?; 3. State Investments Should Focus on Region C; V. How to Efficiently Support the Private Sector; 4. Possible Contribution of Government Investment in Private Sector Projects; VI. Subsidies; 5. Possible Contribution of Demonstration Projects
Literary Form
non fiction
February, 2013
Physical Description
1 online resource (23 p.)
Specific Material Designation
Form Of Item

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