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Pareto Improvement

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PPGPortal > Home > Concept Dictionary > P, Q > Pareto Improvement

Pareto Improvement

A Pareto Improvement is a reallocation of goods in a market, which makes at least one individual better off without making anybody else worse off.

(Dwayne Benjamin, PPG 1002H)


Any allocation of goods in which there remain unrealized Pareto improvements is said to be "Pareto inefficient". Conversely, an allocation in which no further Pareto improvements are possible is said to be "Pareto efficient". In an open, competitive market in which all individuals are able to buy and sell goods freely, a Pareto efficient outcome will be achieved.


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