Theories of Public Sector Growth

  • Stephen J. Bailey
Part of the Macmillan Texts in Economics book series (TE)


Chapter 2 outlined the ‘market failure’ rationale for government intervention. The optimal degree of intervention is clear in principle: only that which is required to offset allocative inefficiency. In principle the economically optimal levels of subsidy and taxation can be calculated in respect of positive and negative externalities, etc. Despite ‘second best’ problems, it is generally accepted that governments should promote competition as far as possible. However these economic prescriptions are insufficient as an explanation of the origins and growth of the public sector. This chapter examines the various economic theories of public sector growth, not all of which make use of market failure concepts.


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Further reading

  1. Brown, C. V. and Jackson, P. M. (1990) Public Sector Economics, 4th edition (Oxford: Basil Blackwell).Google Scholar
  2. Lybeck, J. A. and Henrekson, M. (eds) (1986) Explaining the Growth of Government (Amsterdam: North-Holland).Google Scholar
  3. Gemmell, N. (ed.) (1993) The Growth of the Public Sector: Theories and International Evidence (Aldershot: Edward Elgar).Google Scholar

Copyright information

© Stephen J. Bailey 1995

Authors and Affiliations

  • Stephen J. Bailey
    • 1
  1. 1.Department of EconomicsGlasgow Caledonian UniversityUK

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