Welfare Economics and Second-Best Theory: A Distortion-Analysis Protocol for Economic-Efficiency Prediction

This book examines the implications of The General Theory of Second Best for analyzing the economic efficiency of non-government conduct or government policies in an economically efficient way. It focuses on each of a wide variety of categories of economic inefficiency, analyzes the impact of conduct or policies on each category, and is third-best. It also uses the protocol to analyze the economic efficiency of specific policies to illustrate how it differs from the protocols that most applied welfare economists continue to use.

Format: Paperback / softback
Length: 356 pages
Publication date: 31 May 2021
Publisher: Springer Nature Switzerland AG

This comprehensive book delves into the profound implications of The General Theory of Second Best for effectively analyzing the economic efficiency of non-government conduct or government policies. It presents a groundbreaking methodology for conducting economic efficiency analysis, boasting three distinct characteristics. Firstly, the protocol isolates and examines a wide range of categories of economic inefficiency, many of which traditional analyses overlook. Secondly, it assesses the impact of conduct or policies on these categories, primarily by forecasting the consequences on the distortion caused by the various Pareto imperfections in the profits generated by resource allocations associated with these inefficiencies. Thirdly, it operates as a third-best approach, guiding analysts to undertake theoretical or empirical research projects only if the anticipated gains in economic efficiency by improving the accuracy of conclusions exceed the projected costs of execution and public financing.

Moreover, the book employs this protocol to scrutinize the economic efficiency of specific policies, showcasing the differences between it and the traditional approaches employed by most applied welfare economists. It also highlights the divergent conclusions reached by standard analysis compared to the findings of the protocol. By undertaking a rigorous examination of these topics, this book provides valuable insights into the field of economic efficiency analysis, offering a powerful tool for policymakers and scholars alike.

Weight: 581g
Dimension: 235 x 155 (mm)
ISBN-13: 9783030433628
Edition number: 1st ed. 2020