Robert Ashford


The following introductory note provides a brief overview of the General Theory of Second Best. This theory is discussed in much greater detail in the essay that follows entitled, The General Theory of Second Best and Economic-Efficiency Analysis: The Theory, its Negative Corollaries, the Appropriate Response to It, and a Coda on the Economic Efficiency of Reducing Poverty and Income/Wealth Inequality written by Professor of law and economics Richard Markovits. This theory, which regrettably is generally ignored in law and economics literature, explains how there is no reason to believe that policy decisions considered in isolation that move a particular set of market relations to greater efficiency will increase rather than decrease the overall efficiency of an economy because the effect of such decisions may promote even greater inefficiencies in other sectors of the economy.