One Way to Measure How Much Second Best “Second Best” is

  • Paul A. Samuelson
Part of the Research Monographs in Japan-U.S. Business & Economics book series (JUSB, volume 5)


A democracy chooses to spend a fraction of its real GDP on some public good(s). It can finance that expenditure by excise taxes. When I buy a book in the store, I pay a positive excise tax; if I buy it on the web from, that involves no tax. Such an unbalanced pattern of taxing can add avoidable deadweight loss to the irreducible real cost of the public good. How can we get a measure of the deadweight loss involved in a specified “second-best” scenario?


Public Good Labor Supply Consumer Surplus Private Good Deadweight Loss 
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© Springer Science+Business Media New York 2001

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  • Paul A. Samuelson

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