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One Condition for the First Welfare Theorem to Hold Is

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One condition for the first welfare theorem to hold is that there are no externalities.Can this condition be re-phrased as "all property rights have been established"? And how does this justify a wide range of what we see government doing?


Definitions:

Cost Formula

An equation used to determine the total cost of production or service delivery, factoring in fixed and variable costs.

Flexible Budget

A financial plan that modifies itself in response to variations in volume or activity intensity.

Spending Variance

The difference between the actual amount spent and the budgeted or standard amount expected to be spent.

Net Operating Income

Income before interest and income taxes have been deducted.

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