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Pareto efficiency

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Coase theorem

Coase theorem  

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A concept often invoked in the economic analysis of law. Named after the Nobel laureate Ronald Coase (1911– ), it defines an “efficient” outcome as one in which the net sum of social wealth is ...
economic analysis of law

economic analysis of law  

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A theory of law, usually seen as a modern form of utilitarianism, based largely on the proposition that a rational human being will always act to maximize his satisfactions: if he wants something ...
economic efficiency

economic efficiency  

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A general term for making the maximum use of available resources. Economic efficiency in this sense is purely descriptive, and does not provide a precise definition or test. Pareto efficiency is a ...
efficiency

efficiency  

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The ratio of the work done to the effort used; usually the relation of output to input. Spatial efficiency—the organization of space in order to minimize costs—is central to location theory; see ...
efficient allocation

efficient allocation  

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A feasible allocation of economic resources such that there is no alternative feasible allocation where one economic agent is better off and no agent worse off. See also Pareto efficiency.
Kaldor-Hicks efficiency

Kaldor-Hicks efficiency  

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In economic theory, an alteration in the allocation of resources is said to be Kaldor-Hicks efficient when it produces more benefits than costs. A Pareto efficiency arises when at least one person is ...
Pareto efficient

Pareto efficient  

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The term applied to describe an allocation that satisfies the conditions required for Pareto efficiency.
profit motive

profit motive  

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The desire for gain as a motive in economic activity. The profit motive can mean no more than the assumption that firms aim to maximize profit, but it can also be used in a derogatory sense to imply ...
shadow price

shadow price  

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Prices of goods, services, and resources that are proportional to true opportunity costs for the economy, taking account of any externalities. If individuals and firms all made choices to maximize ...
welfare criterion

welfare criterion  

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A method of deciding whether a proposed change in the economy should be made. The Pareto criterion says that a change should be made if somebody gains and nobody loses. This is uncontroversial, but ...
welfare economics

welfare economics  

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The part of economics concerned with the effects of economic activity on welfare. This includes the modelling of individual or household behaviour by utility functions; criteria for efficiency, ...

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