In case you don't understand, Batman is the first person arrested. He keeps one foot in the world of sanity and gives the Joker false hope of getting there too. The second prisoner saying no represents the Joker refusing Batman's plea.

Famous comic book writer Grant Morrison noted in Kevin Smith's “Fatman on Batman” Podcast that the ending is intended to imply that Batman kills the Joker. That's why it's called “The Killing Joke,” they argued. It's a convincing interpretation; in the opening of the book, Batman tells the Joker (actually a body double) that they will end up killing each other if they keep fighting and he wants to stop it. Batman finally giving in would add to the tragedy.

The animated film “Killing Joke” even hints at Morrison’s reading. In the version of the film's ending, the Joker's laughter stops abruptly, as if Batman had broken his neck, and only Batman's laughter is heard as the film cuts to black. Such a suggestion cannot be conveyed by a comic book, which inherently lacks sound.

However, for Moore, the ending is about Batman and the Joker sharing a moment of resignation. That he does it fits better with the joke that precedes the ending. Moore explained in Good reads:

“My intention at the end of [‘The Killing Joke’] was to have the two characters simply experience a brief moment of lucidity in their very strange and probably fatal relationship with each other, reaching a moment where they both realize the hell they're in, and can only laugh at their absurd situation.

Furman and Sullivan realized this. That's why his “Transformers” homage has the same theme of two adversaries resigned to eventually killing each other despite wishing they couldn't.

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