first best

English

Alternative forms

Adjective

first best (not comparable)

  1. (economics) Characterized by all optimality conditions being satisfiable.
    • 2018, Lars Ljungqvist and Thomas J. Sargent, Recursive macroeconomic theory, 4th edition, MIT Press, page 200:
      Here the government should avoid any policy that affects the workers' decision rules since it would harm efficiency, and the first-best way of pursuing distributional goals is through lump-sum transfers.
    • 2025 May, Iván Werning, Guido Lorenzoni, Veronica Guerrieri, “Tariffs as Cost-Push Shocks: Implications for Optimal Monetary Policy”, in NBER Working Paper Series‎[1], number 33772, page 5:
      Without a tariff, the competitive equilibrium outcome coincides with the first best allocation.

Noun

first best (plural first bests)

  1. (economics) A situation where all optimality conditions are satisfied.
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