 In this medial, we will learn about the theory of the second best. Prior to that, when we start this course, we learned that free trade is always beneficial for the world because through trade, the world can gain different advantages in terms of more production, better utilization of resources and the use of factor endowments. So, after that particular scenario, we learned about the custom unions. So, a general perception that free trade always helps for the country or for the world as a whole, we learned something in the previous medials where we also saw that trade can be converged and then it can be diverged to some point. So, ultimately, what propagated the custom union, we used to say that in any form of the custom union is formed, it will help the overall world as well because the extra resources generated by forming custom union will be used towards the rest of the world or you can say, this extra income will be spent on the goods and services imported from the rest of the world. But this phenomenon was challenged. Later, in 1956, Lipsy challenged this phenomenon. And a theory of second best that we can see in the custom union is that if all the conditions required to maximize welfare cannot be satisfied, trying to satisfy as many as these conditions does not necessarily or usually lead to the second best. In simple words, we can say that if for the welfare of the overall world, which you have pre-requisites, if you cannot achieve them, then the rest of the world, to get near to this particular or you can say optimum level, it is not necessary to provide the second best solution. Because you keep propagating this, which economists say at the start before the winter work, it was that trade helps and uses the resources better. This is what we studied in traditional theories of trade, whether it is the absolute advantage case, whether it is the comparative advantage case, in both forms, we said that free trade would benefit the world as a whole. But in this case, there was an addition of the custom union, a specific region or you can say block of countries, it can also be a block on a regional point, like the European Union or the NAFTA concept. That too, to some extent overall, can be beneficial for the whole world. This is not the case. Here, this challenge happened that the theory of second best is that if you cannot go towards free trade, you cannot achieve the optimum level, which you could take as much as possible with the help of free trade, if you cannot get those welfare gains, you cannot basically get the best second solution by making custom union. So, in that case, why the custom union? When we were studying the custom union, we saw the possible outcomes, that were the aspects of the trade diverging and the aspects of the conversion, and we also saw its implications. In this case, the welfare of the overall world can rise and fall. It totally depends on the situation and particularly the commodities that we are talking about for the trade purposes. So, this theory says that after free trade, if you come towards custom unions, it might not be the best second solution to get welfare gains for the whole world. Thank you very much.