This book is the second edition of Public Finance and Public Policy (2003). The second edition retains the first edition’s themes of investigation of responsibilities and limitations of government but has been rewritten and restructured. Public-choice and political-economy concepts and political and bureaucratic principal–agent problems that are the sources of limitations on government are introduced at the beginning for application to later topics. Concepts of behavioral economics and experimental results are integrated throughout this edition. Asymmetric in-formation is a recurring theme. The book begins with the efficiency case for the competitive market and the minimal responsibility of government to ensure the rule of law. Subsequent chapters address questions concerning institutions and governance, public goods, taxation and bond financing of public spending, market corrections (externalities and paternalist public policies), voting, social justice, entitlements, and choice of the structure of taxation and the tax base. The final chapter summarizes evidence on and reasons for the growth of government and considers how trust or social capital affects the need for government. The purpose of the book is to provide an accessible introduction to the choice between relying only on personal decisions in markets and the use of public finance and public policy by governments to improve on market outcomes