This course discusses basic questions in economics like: When can markets be inefficient? When do such inefficiencies generate a rationale for the government to intervene? By what methods should the government intervene?

We begin the course by reviewing the basic welfare theorems that suggest markets should work well. The first welfare theorem suggests market outcomes are always Pareto efficient – there are no policies the government can do to make everyone better off relative to what the market allocation provides. The second welfare theorem suggests that any desired Pareto...