Course Meeting Times

Lectures: 1 session / week, 2 hours / session

Course Description

In analyzing fiscal issues, conventional public finance approaches focus mainly on taxation and public spending. Policymakers and practitioners rarely explore solutions by examining the fundamental problem: the failure of interested parties to act collectively to internalize the positive externalities generated by public goods. Public finance is merely one of many possible institutional arrangements for assigning the rights and responsibilities to public goods consumption. This system is currently under stress because of the financial crisis. The first part of the class will focus on collective action and its connection with local public finance. The second part will explore alternative institutional arrangements for mediating collective action problems associated with the provision of local public goods.

Course Objective

The objective of the seminar is to broaden the discussion of local public finance by incorporating collective action problems into the discourse. This inclusion aims at exploring alternative institutional arrangements for financing local public services in the face of severe economic downturn. Applications of emerging ideas to the provision of public health, education, and natural resource conservation will be discussed.

Course Requirements

1. Leading class discussion
Each student will be responsible for leading at least two class discussions. Discussion sessions will be scheduled in the second week of the class.

2. A final paper (if taking the seminar for 9 credit units)
Students will write a final paper for the class if they decide to take the course for more than 6 credit units. It could either be a research paper or proposal. The project will be divided into two parts:

  • A class presentation of the project at the end of the semester
  • A final paper (or research proposal) that is due 10 days after Ses #12

Course Grading

1. Students who take the class for 9 credit units will be graded according to the following weights:

Presentation of assigned readings and class participation 60%
Class presentation of final paper (or research proposal) 20%
Final paper (or proposal) 20%


2. Students who take the class for 6 credit units will be graded based on their presentations of assigned readings and class participation.

Course Texts

This course consists of required and recommended readings. The readings page contains the readings list.

MIT Statement on Plagiarism

Plagiarism—use of another's intellectual work without acknowledgement—is a serious offense. It is the policy of the Literature Faculty that students who plagiarize will receive an F in the subject, and that the instructor will forward the case to the Committee on Discipline. Full acknowledgement for all information obtained from sources outside the classroom must be clearly stated in all written work submitted. All ideas, arguments, and direct phrasings taken from someone else's work must be identified and properly footnoted. Quotations from other sources must be clearly marked as distinct from the student's own work. For further guidance on the proper forms of attribution, consult the style guides available at the Writing and Communication Center and the MIT Web site on Plagiarism.


1 Introduction  
I. The failure of collective action
2 The origin of the debate over collective action and public goods  
3 The orthodox solutions to collective action problems associated with public goods provision  
II. Reexamining the collective action impossibility theorem
4 Reconceptualizing self and society  
5 Anti-necessitarianism and new social orders  
6 The emergence of cooperation  
7 Trust and reciprocity  
III. Applications of collective action theory to public goods provisions
8 Philanthropy: limitations and possibilities  
9 Public-private partnerships, community activism, and public education  
10 Public health  
11 Natural resource conservation  
IV. Presentations of class projects
12 Project presentations

Class presentation

Final paper due 10 days after Ses #12