Suchergebnisse

Cover -- Copyright -- Contents -- Abbreviations and acronyms -- Foreword -- Preface -- Acknowledgements -- 1. Introduction -- 2. Dissipating multilateralism -- 3. Theory of customs unions -- 4. Common markets -- 5. Globalisation -- 6. Economic union -- 7. Integration groups -- 8. Measuring the effects of international economic integration -- 9. Conclusions -- Bibliography -- Index

AbstractThis paper presents the editors' introduction for a symposium on Second and Third Best Theory forthcoming in The Pacific Economic Review, 22:2, May 2017. Unusual in such cases, the editors are the major protagonists in the debate. In the symposium Ng maintains that second‐best theory appears to preclude giving theory‐based policy advice because full second‐best optima can never be determined in practical cases. While agreeing about second‐best optima, Lipsey disagrees with Ng's conclusion regarding policy and discusses the development of context‐specific policies not based on the theory of optimal resource allocation. 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 from the first‐best value). 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. Woo 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.

AbstractIn this final piece to the symposium for a special issue ofPacific Economic Reviewon 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.