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/repec-econ/sfu/sfudps/dp16-16.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Mark Blaug, 2007. "The Fundamental Theorems of Modern Welfare Economics, Historically Contemplated," History of Political Economy, Duke University Press, vol. 39(2), pages 185-207, Summer.
    2. R. G. Lipsey & Kelvin Lancaster, 1956. "The General Theory of Second Best," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 24(1), pages 11-32.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Abraham Singer, 2018. "Justice Failure: Efficiency and Equality in Business Ethics," Journal of Business Ethics, Springer, vol. 149(1), pages 97-115, April.
    2. Richard G. Lipsey, 2017. "Generality Versus Context Specificity: First, Second and Third Best in Theory and Policy," Pacific Economic Review, Wiley Blackwell, vol. 22(2), pages 167-177, May.
    3. Richard G. Lipsey, 2012. "A critique of Ng's third-best theory," Discussion Papers dp12-02, Department of Economics, Simon Fraser University.
    4. Richard G. Lipsey, 2013. "Some contentious issues in theory and policy in memory of Mark Blaug," Chapters, in: Marcel Boumans & Matthias Klaes (ed.), Mark Blaug: Rebel with Many Causes, chapter 6, pages 31-62, Edward Elgar Publishing.
    5. Charlie Blunden, 2022. "Between Market Failures and Justice Failures: Trade-Offs Between Efficiency and Equality in Business Ethics," Journal of Business Ethics, Springer, vol. 178(3), pages 647-660, July.
    6. Richard G. Lipsey, 2012. "Policy Implications of Alternative Economic Paradigms: Some surprises from endogenous technological changes," Discussion Papers dp12-16, Department of Economics, Simon Fraser University.
    7. Jun Rentschler & Raimund Bleischwitz & Florian Flachenecker, 2018. "On imperfect competition and market distortions: the causes of corporate under-investment in energy and material efficiency," International Economics and Economic Policy, Springer, vol. 15(1), pages 159-183, January.
    8. Richard G. Lipsey & Yew-Kwang Ng, 2017. "Editors’ Introduction The two authors had tried alternative drafts to reach a consensus. While they had no problem in agreeing on Part II, the final version of Part I was mainly drafted by Lipsey, par," Pacific Economic Review, Wiley Blackwell, vol. 22(2), pages 147-154, May.
    9. Michael Bennett, 2023. "Managerial Discretion, Market Failure and Democracy," Journal of Business Ethics, Springer, vol. 185(1), pages 33-47, June.
    10. Richard G. Lipsey, 2017. "Economic Policy with and without Maximizing Rules," Pacific Economic Review, Wiley Blackwell, vol. 22(2), pages 189-212, May.
    11. Martin B. Hackmann & Jörg Heining & Roman Klimke & Maria Polyakova & Holger Seibert, 2025. "Health Insurance as Economic Stimulus? Evidence from Long-Term Care Jobs," NBER Working Papers 33429, National Bureau of Economic Research, Inc.
    12. Emmanuel Petrakis & Panagiotis Skartados, 2022. "Vertical Opportunism, Bargaining, and Share-Based Agreements," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 60(4), pages 549-565, June.
    13. Jonathan M. Lee, 2015. "The Impact of Heterogeneous NOx Regulations on Distributed Electricity Generation in U.S. Manufacturing," Working Papers 15-12, Center for Economic Studies, U.S. Census Bureau.
    14. Iman Khajepour & Geoffrey Pritchard & Danny Ralph & Golbon Zakeri, 2025. "On monotone completion of risk markets: Limit results for incomplete risk markets," Papers 2504.18436, arXiv.org.
    15. Sergio Turner, 2004. "Pareto Improving Taxation in Incomplete Markets," Econometric Society 2004 Latin American Meetings 310, Econometric Society.
    16. Bhardwaj, Chandan & Axsen, Jonn & Kern, Florian & McCollum, David, 2020. "Why have multiple climate policies for light-duty vehicles? Policy mix rationales, interactions and research gaps," Transportation Research Part A: Policy and Practice, Elsevier, vol. 135(C), pages 309-326.
    17. Kala Krishna & Abhiroop Mukhopadhyay & Cemile Yavas, 2005. "Trade with Labor Market Distortions and Heterogeneous Labor: Why Trade Can Hurt," Contributions to Economics, in: Günter S. Heiduk & Kar-yiu Wong (ed.), WTO and World Trade, pages 65-83, Springer.
    18. Richter, Wolfram F., 2009. "Taxing education in Ramsey's tradition," Journal of Public Economics, Elsevier, vol. 93(11-12), pages 1254-1260, December.
    19. Eduard Hartwich & Alexander Rieger & Johannes Sedlmeir & Dominik Jurek & Gilbert Fridgen, 2023. "Machine economies," Electronic Markets, Springer;IIM University of St. Gallen, vol. 33(1), pages 1-13, December.
    20. Hakim Hammadou & Claire Papaix, 2015. "Policy packages for modal shift and CO2 reduction in Lille, France," Working Papers 1501, Chaire Economie du climat.

    More about this item

    Keywords

    Second best; third best; informational poverty; distortions; economic policy;
    All these keywords.

    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.

    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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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.

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

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.