Abstract
This chapter focuses on the types of economic activity that are amenable to public sector action than to coordination by market forces. However, the government is an alternative agent for coordinating activity. It is fruitful to analyze the public sector in the same way in which the private sector is analyzed. Although individuals make a multitude of different decisions, the actions decided upon are taken collectively. Collective action, through government, has the potential for correcting market failures and redistributing income. The public sector is an alternative to the market—it provides an alternative means of organizing production and /or distributing output. Voters cast ballots, make political contributions, lobby, and adopt other political strategies to demand public sector action. Other things constant, a voter has a strong incentive to support the candidate who offers him the greatest personal gain relative to personal costs.
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