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Pareto efficiency

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In economic theory, an alteration in the allocation of resources is said to be Pareto efficient when it leaves at least one person better off and nobody worse off. A state of Pareto optimality occurs when no further Pareto-efficient changes can be made. The concept was first described by the Italian economist Vilfredo Pareto (1848–1923). Compare Kaldor-Hicks efficiency.

Subjects: Social sciencesEconomics

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