Pareto Improvement

Posted in Finance, Accounting and Economics Terms, Total Reads: 304

Definition: Pareto Improvement

An action done in economics that harms no one but helps at least one individual.Pareto improvement keeps adding to the economy until Pareto’s equilibrium is achieved. This is feasible to implement by consuming idle resources in the economy or by writing off deadweight losses that result in market failures. It cannot be said that perfect efficiency has been achieved if there still exist a scope for even a single Pareto Improvement.


The concept of Pareto efficiency can also be useful to the selection of alternative solutions in engineering and similar fields. Each option is evaluated under various criteria and then a subset of these options is acknowledged with the feature that no other alternative can outperform its members.



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