First-best rules are required in all third-best settings - Discuss
I understand that first best rules mean: all conditions for efficiency are satisfied simultaneously, i.e. efficient distribution, production and provision.
But what is 'third best settings'? How does it relate to first-best rules?
I understand that first best rules mean: all conditions for efficiency are satisfied simultaneously, i.e. efficient distribution, production and provision.
But what is 'third best settings'? How does it relate to first-best rules?