ABSTRACT
This chapter presents a conceptual framework for Applied Welfare Economics, consistent with some of the ideas discussed in the previous two chapters. The first chapter has discussed some definitions of social welfare. Chapter 2 has offered a critical review of some interpretations of the two fundamental welfare theorems and has concluded that there are many possible solutions to the optimization problem of a benevolent government, given its objectives and constraints. The first-best solutions are of no practical relevance, and there are several ways to consider a second-best frame.
