Reflections on the general theory of second best at its golden jubilee

  title={Reflections on the general theory of second best at its golden jubilee},
  author={Richard G. Lipsey},
  journal={International Tax and Public Finance},
  • R. Lipsey
  • Published 13 June 2007
  • Economics
  • International Tax and Public Finance
Abstract The origin of the second best article is described and criticisms assessed. Distortions making impossible the achievement of either first or second best optima are outlined. Attempts to establish the applicability of first best rules are criticised, as are general rules for making piecemeal efficiency improvements. Both often use models containing empirically invalid assumptions and a selected few of the full set of distortions. Practical policy advice requires more parochial objective… 

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