Towards a Characterization of Second‐Best Pure Strategy Solutions to a Smooth and Symmetric Partnership Problem

Dragan Filipovich

Journal of Public Economic Theory, 2002, vol. 4, issue 3, 437-454

Abstract: This article makes a start in characterizing the second‐best solution to a smooth, symmetric partnership problem. It derives a more tractable formulation of the problem using a modified version of the condition in Legros and Matthews (1993). Then it uses this formulation to show that the second‐best solution will depend crucially on the curvature (third derivatives) of the production and disutility schedules. Moreover, it shows that the residual claimant solution will be second‐best for sufficiently large partnerships.

Date: 2002
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https://doi.org/10.1111/1467-9779.00107

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Persistent link: https://EconPapers.repec.org/RePEc:bla:jpbect:v:4:y:2002:i:3:p:437-454

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