Microeconomics question

Discussion in 'Economics' started by swks26, Jul 24, 2011.

  1. swks26


    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? :confused: