The structure of the course is divided into two different parts. The first part of the course is based on a lecture. The second part of the course consists of units which are taken over and presented by the students.

In the lecture part we will critically examine the frequently used "reference world" of efficient markets. From a normative perspective, the various forms of market failure are explained, most of which are the justification for state action and intervention in markets. In particular, public goods, external effects, incomplete information and natural monopolies are addressed. In the course of this discussion, particular attention is paid to the difficulties in balancing efficiency and equity.

Subsequently, government activity is discussed from a positive perspective. In this context, politico-economic phenomena of collective decision-making in direct as well as representative democracy (Arrow's impossibility theorem, median voter theorem, party competition and vote swaps) are addressed. The treatment of and distinction between positive and normative aspects of state activity is intended to create an understanding of the difference in the intensity of economic policy activities between an ideal and a real world.

Equipped with these theoretical tools, students in the second part of the course will apply their knowledge to specific areas of economic policy activity. For this purpose, presentations will be given on specific fields of economic policy intervention. The concrete topics can be based on the students' interests and may include the following areas: Poverty prevention, social security, labor market policy, environmental policy, innovation policy, housing policy etc.

· A thorough understanding of the rationale for government action in the economy

· An practical application of theoretical knowledge to different areas of economic policy

· Classical lecture (first part)

· Student presentations (second part)

The evaluation of the lecture part is based on active participation and the solution of problem sets (30%) and on a final test (30%). The remaining 40% of the total grading is based on the evaluation of the students' presentation part. Further course details and literature references are given in the first unit.

Attendance is compulsory. Students can miss two units without excuse. A further absence must be justified.