Journal Article Structure of the Correspondence Principle at an Extremum Point Get access Tatsuo Hatta Tatsuo Hatta Johns Hopkins University Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 47, Issue 5, October 1980, Pages 987–997, https://doi.org/10.2307/2296928 Published: 01 October 1980 Article history Received: 01 January 1978 Accepted: 01 February 1980 Published: 01 October 1980

Journal Article Adaptive Expectations and Uncertainty Get access T. Lawson T. Lawson University of Cambridge Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 47, Issue 2, January 1980, Pages 305–320, https://doi.org/10.2307/2296994 Published: 01 January 1980 Article history Received: 01 September 1977 Accepted: 01 March 1979 Published: 01 January 1980

T. S. Breusch, A. R. Pagan; The Lagrange Multiplier Test and its Applications to Model Specification in Econometrics, The Review of Economic Studies, Volume 47,

In a comment published in the Review of Economic Studies Professors Santoni and Church (1972) corrected a mathematical flaw which existed in Lipsey's and Lancaster's (1956) seminal article on the theory of second best. The correction of that error, although it had no effect on the statement of the general theorem of second best, had a significant impact on the necessary conditions for the attainment of the second best position. Professors Santoni and Church, however, in their analysis on the equivalence of first best and second best optimality conditions, missed a point which is important because it proves a theorem whose position in the literature of Welfare Economics goes back at least as far as Pigou (1932). We may paraphrase this theorem as follows. If there is a distortion in some sector of the economy, then the Pareto and second best solutions for the rest of the economy are equivalent if the marginal rate of substitution (transformation) between any two industries is equal to the marginal rate of distortion between these two industries. In this comment we will provide a rigorous proof of this theorem and also give an economic example which validates the theorem under quite general conditions. In formulating the proof we will employ the same notation as that employed by

Ernst R. Berndt, Thomas H. McCurdy, David E. Rose; On Testing Theories of Financial Intermediary Portfolio Selection, The Review of Economic Studies, Volum