IDEAS home Printed from https://ideas.repec.org/p/sfu/sfudps/dp16-16.html
   My bibliography  Save this paper

Editor’S Introduction To: A Symposium On Second And Third Best Theory: Criticisms And Applications

Author

Listed:

Abstract

This paper presents the editor’s introduction and the table of contents for a symposium on Second and Third Best Theory forthcoming in The Pacific Economic Review, 22:2, May 2017. Unusual in such cases, the two editors are the major protagonists in this debate. In the symposium Ng maintains that second-best theory appears to preclude giving theory-based policy advice because full second-best optima cannot be determined in any practical case. Lipsey disagrees and discusses the development of context-specific policies not based on the theory of the optimal allocation of resources. To allow for theory-based policy, Ng offers his theory of third best. The major disagreement over this theory concerns its proposition: first-best rules for third-best worlds under Informational Poverty (not enough is known to determine the desirable direction of change of some the policy variable). Lipsey argues that, if correct, this rule would upset the main result of second-best theory that the sign of the change in the objective function may be either positive or negative when first-best rules are fulfilled piecemeal in second-best worlds. Wo supports Ng’s third best theory and derives additional rules, while Boadway surveys the application of second best theory in several cases from the literature of public economics.

Suggested Citation

  • Yew-Kawng Ng & Richard Lipsey, 2016. "Editor’S Introduction To: A Symposium On Second And Third Best Theory: Criticisms And Applications," Discussion Papers dp16-16, Department of Economics, Simon Fraser University.
  • Handle: RePEc:sfu:sfudps:dp16-16
    as

    Download full text from publisher

    File URL: http://www.sfu.ca/econ-research/RePEc/sfu/sfudps/dp16-16.pdf
    Download Restriction: no

    More about this item

    Keywords

    Second best; third best; informational poverty; distortions; economic policy;

    JEL classification:

    • D6 - Microeconomics - - Welfare Economics
    • D60 - Microeconomics - - Welfare Economics - - - General
    • H0 - Public Economics - - General
    • H10 - Public Economics - - Structure and Scope of Government - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sfu:sfudps:dp16-16. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Working Paper Coordinator). General contact details of provider: http://edirc.repec.org/data/desfuca.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.