PUBLIC SECTOR ECONOMICS provides a comprehensive, wide-ranging treatment of the subject, dealing with theory, policy and practice with the broad context of political economy and gives a more general integration of them than is found in most other texts. It recognises that students invariably study other subjects simultaneously with economics and so attempts to provide more of a multi-disciplinary approach than is usuallly the case. The book reflects the changing nature of 'public' in recognising that a textbook in this area has to be made less technical and mechanistic and more appreciative of political economy. This second edition has retained the structure of the first edition, all chapters having been updated and expanded in terms of coverage of theory, policy and practice. The 1997 Labour Government's policies and initiatives have been fully incorporated in Parts II and III.