The General Theory of Second Best

Lipsey, R. G., & Lancaster, K. (1956). The General Theory of Second Best. Review of Economic Studies, 24(1), 11-32.

Type

Journal article

Intellectual base

Review or monograph

Year

1956

Volume

24

Issue

1

Pages

11-32

DOI

10.2307/2296233

DOI registrant

Oxford University Press

Link

https://doi.org/10.2307/2296233

Cited from

economics_finance

Cited by

2 citations across 2 artifacts.

Each citation links to the sentence it supports in the citing article.

Primes

• Deadweight Loss
  • T1 — Partial-Equilibrium Framing May Miss General-Equilibrium Effects: In a general-equilibrium setting with pre-existing distortions elsewhere (other taxes, other externalities), a policy that reduces a local deadweight loss can increase overall DWL (second-best analysis; Lipsey-Lancaster).

    This sourceEstablishes that when one optimality condition cannot be met, correcting a single distortion while others remain need not improve welfare — the core second-best result that fixing one distortion can increase overall deadweight loss.

• Pareto Efficiency
  • Lipsey-Lancaster (General Theory of Second Best, 1956)

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