​KembaraXtra – Legal Terms – Pareto Efficiency


Pareto efficiency is an economic concept used in the economic analysis of law.


A change is Pareto efficient if at least one person becomes better off while no one becomes worse off.


A situation reaches Pareto optimality when no further improvement can occur without disadvantaging another person.


The concept was developed by the Italian economist Vilfredo Pareto.


Pareto efficiency is commonly compared with concepts such as Kaldor-Hicks efficiency and the Coase theorem.