Welfare Economics and Second-Best Theory

Focusing on economic inefficiency, this book introduces a novel analysis protocol that distinguishes between various categories often overlooked in traditional assessments. It evaluates how specific conduct or policies affect these inefficiencies by examining their influence on profitability versus economic efficiency, particularly in the context of Pareto imperfections. Additionally, the protocol emphasizes a third-best approach, recommending research only when expected efficiency gains surpass execution costs. The book further illustrates its application through case studies, highlighting its distinct conclusions compared to conventional welfare economics.