Fixing only one market distortion can leave everyone worse off

Economists Richard Lipsey and Kelvin Lancaster proved in 1956 that if one condition for a fully efficient economy can't be met, satisfying more of the remaining conditions doesn't necessarily get you closer to the best outcome. Removing distortions one at a time, it turns out, isn't automatically progress.

— Richard Lipsey and Kelvin Lancaster, The General Theory of Second Best — The Review of Economic Studies, Vol. 24, No. 1, 1956

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