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An Evolutionary Efficiency Alternative to the Notion of Pareto Efficiency

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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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  • Irene van Staveren, 2012. "An Evolutionary Efficiency Alternative to the Notion of Pareto Efficiency," Economic Thought, World Economics Association, vol. 1(1), pages 1-6, July.
  • Handle: RePEc:wea:econth:v:1:y:2012:i:1:p:6
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    Cited by:

    1. van Staveren, I.P., 2017. "Has populism reached economics?," ISS Working Papers - General Series 361, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague.
    2. van Staveren, I.P., 2017. "Has populism reached economics? Two criteria for assessing normative empirical concepts in economics," ISS Working Papers - General Series 631, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague.
    3. Chanteau, Jean-Pierre & Labrousse, Agnès, 2013. "L’institutionnalisme méthodologique d’Elinor Ostrom : quelques enjeux et controverses," Revue de la Régulation - Capitalisme, institutions, pouvoirs, Association Recherche et Régulation, vol. 14.
    4. Li, Cheng, 2014. "Rationality and Beyond: A Critique of the Nature and Task of Economics," MPRA Paper 56651, University Library of Munich, Germany.

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