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An Evolutionary Efficiency Alternative to the Notion of Pareto Efficiency

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  • Irene van Staveren
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    Abstract

    The paper argues that the notion of Pareto efficiency builds on two normative assumptions: the more general consequentialist norm of any efficiency criterion, and the strong no-harm principle of the prohibition of any redistribution during the economic process that hurts at least one person. These normative concerns lead to a constrained and static notion of efficiency in mainstream economics, ignoring dynamic efficiency gains from more equal allocations of resources. The paper argues that a weak no-harm principle instead provides an endogenous efficiency criterion, which shifts attention away from equilibrium analysis in hypothetically perfect markets towards an evolutionary analysis of efficiency in real-world, non-equilibrium markets. Moreover, such an evolutionary notion of efficiency would be less normative than the Paretian concept.

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    Bibliographic Info

    Article provided by World Economics Association in its journal Economic Thought.

    Volume (Year): 1 (2012)
    Issue (Month): 1 (July)
    Pages: 7

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    Handle: RePEc:wea:econth:v:1:y:2012:i:1:p:7

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