Information Package / Course Catalogue
Public Economics I
Course Code: MLY303
Course Type: Required
Couse Group: First Cycle (Bachelor's Degree)
Education Language: Turkish
Work Placement: N/A
Theory: 3
Prt.: 0
Credit: 3
Lab: 0
ECTS: 5
Objectives of the Course

The objective of the Public Economics 1 course is to examine the fundamental assumptions of a well-functioning market economy, identify types of market failures, and explain the role of government in addressing these failures through theoretical and graphical analysis. The course covers various sources of market failure such as public goods, externalities, imperfect competition, economies of scale, and asymmetric information. It further analyzes the government’s intervention tools—such as subsidies, Pigouvian taxation, user pricing, and peak-load pricing—using graphical models. Additionally, the course compares the effects of direct and indirect taxes on individual budget constraints through utility functions and graphical representation.

Course Content

The Public Economics 1 course explores the role of the state within the economic system through the lens of market failures. It examines key sources of inefficiency such as public goods, externalities, imperfect competition, asymmetric information, and economies of scale, and analyzes the policy instruments governments use to correct them. The course provides graphical analysis of efficient public good provision, internalization of externalities, and pricing strategies for local public goods. It also compares the effects of direct and indirect taxation on individual budget constraints using utility functions and graphical tools.

Name of Lecturer(s)
Lec. Gülizar Seda YILMAZ
Learning Outcomes
1.To be able to understand market failures and the rationale for government intervention
2.To be able to analyze the efficient provision of public goods through graphical methods
3.To be able to evaluate policy instruments used by the state in response to positive and negative externalities
4.To be able to explain user pricing and peak-load pricing methods for local public goods
5.To be able to comparatively analyze the effects of direct and indirect taxes on individual budget constraints
Recommended or Required Reading
1.Kirmanoğlu, H. (2021). Analysis of Public Economics. Istanbul: Beta Publishing.
2.Şener, O. (2020). Public Economics: Theory and Policy. Ankara: Nobel Publishing.
3.Eğilmez, M. (2023). Public Finance. Istanbul: Remzi Publishing.
4.Yeldan, E. (2001). “Efficiency of Public Expenditures and Fiscal Policy”. Journal of Political Science, Ankara University, 56(4), 95–112.
5.Türel, O. (1995). “The Public Sector and the Economic Functions of the State”. Society and Science, 66, 35–54.
6.Alkin, E. (2005). “The Effects of Taxes on Income Distribution: The Case of Turkey”. Journal of Public Finance, 149, 25–42.
7.Demir, M. & Gök, H. (2013). “The Effects of Direct and Indirect Taxes on Economic Growth: The Case of Turkey”. Journal of Political Science, Ankara University, 68(2), 55–78.
Weekly Detailed Course Contents
Week 1 - Theoretical
Introduction to Public Economics: Scope of public economics, the role of the state in the economy, normative and positive analysis.
Week 2 - Theoretical
Functioning and Efficiency of Market Economy: Assumptions of competitive markets, pareto efficiency, graphical analysis of market equilibrium.
Week 3 - Theoretical
Market Failures and Government Intervention: Types of market failures and rationale for public intervention.
Week 4 - Theoretical
Public Goods and Efficient Provision: Characteristics of public goods, free-rider problem, conditions for efficient provision.
Week 5 - Theoretical
Local Public Goods, User Fees, and Peak-Load Pricing: Characteristics of local public goods , application of user fee, pricing strategies during peak demand.
Week 6 - Theoretical
Positive Externalities and Public Support Policies: Definition of positive externalities, analysis of optimal level of public subsidy explained with examples such as education and R&D.
Week 7 - Theoretical
Negative Externalities and Pigouvian Taxation: Definition of negative externalities, internalization approach with polluting firm example.
Week 8 - Theoretical
Imperfect Competition and Economies of Scale: Market power and the need for intervention, concept of natural monopoly, market failure through economies of scale.
Week 9 - Theoretical
Asymmetric Information and the Role of the State: Adverse selection and moral hazard, regulatory responses of the state, insurance market examples and analysis.
Week 10 - Theoretical
Introduction to the Tax System: Difference between direct and indirect taxation and objectives of taxation.
Week 11 - Theoretical
The Impact of Indirect Taxes on Budget Constraint: Consumer behavior and the budget line, effects of indirect taxes on individual preferences, analysis through utility functions and graphs.
Week 12 - Theoretical
The Impact of Direct Taxes on Budget Constraint: Effects of income taxes on individuals Income effect in direct taxation, comparative graphical analysis, efficiency comparison between direct and indirect taxation.
Week 13 - Theoretical
Efficiency and Equity in Taxation: Optimal taxation, trade-off between efficiency and equity, concepts of progressivity, horizontal and vertical equity.
Week 14 - Theoretical
General Review and Applied Examples: Recap of all market failures, comparative graphical analysis of tax effects, applied discussions and examples.
Assessment Methods and Criteria
Type of AssessmentCountPercent
Midterm Examination1%40
Final Examination1%60
Workload Calculation
ActivitiesCountPreparationTimeTotal Work Load (hours)
Lecture - Theory143384
Practice Examination112113
Midterm Examination124125
TOTAL WORKLOAD (hours)122
Contribution of Learning Outcomes to Programme Outcomes
PÇ-1
PÇ-2
PÇ-3
PÇ-4
PÇ-5
PÇ-6
PÇ-7
PÇ-8
PÇ-9
PÇ-10
OÇ-1
5
5
3
3
4
3
5
4
2
2
OÇ-2
5
5
2
3
3
1
5
3
2
1
OÇ-3
5
5
2
3
3
1
5
4
1
1
OÇ-4
5
5
2
2
3
2
5
3
1
2
OÇ-5
5
5
2
2
3
3
5
5
3
3
Adnan Menderes University - Information Package / Course Catalogue
2026