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- Title
Concluding Comments to the Debate.
- Authors
Lipsey, Richard G.; Ng, Yew‐Kwang
- Abstract
In this final piece to the symposium for a special issue of Pacific Economic Review on the theories and applications of second-best and third-best theories, Richard Lipsey and Yew-Kwang Ng provide their final comments to the debate. Several issues of agreement and disagreement are discussed. Most importantly, while both agree on the formal correctness of both the second-best and third-best theories, Lipsey believes the main proposition of third-best theory (following the first-best rules under Informational Poverty) is applicable only to a situation (status quo) where the first-best rule (such as taxing a pollution at the marginal damage of $N) is already being followed; Ng regards it as applicable whether or not the first-best rule is currently being followed. This also partly explains their difference on the practical policy relevance and the importance of that theory.
- Subjects
SECOND best (Economic theory); WELFARE economics; ECONOMICS; LIPSEY, Richard; YEW-Kwang Ng
- Publication
Pacific Economic Review, 2017, Vol 22, Issue 2, p213
- ISSN
1361-374X
- Publication type
Article
- DOI
10.1111/1468-0106.12223