Difference between revisions of "Efficiency vs. Equity"
From Diversifying Economic Quality: A Wiki for Instructors and Departments
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Allocation so that no one can be made better off | Allocation so that no one can be made better off | ||
− | [[File:paretoefficiency.gif]] | + | [[File:paretoefficiency.gif[frame]] |
Microeconomic Definition of Maximization of Utility via Minimization of Cost | Microeconomic Definition of Maximization of Utility via Minimization of Cost | ||
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counterarg...$ used for equity has a higher effect on economic growth, spending chain, human capital | counterarg...$ used for equity has a higher effect on economic growth, spending chain, human capital | ||
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+ | == Social Welfare Functions == | ||
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+ | Utilitarianism | ||
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+ | Rowlslian |
Revision as of 10:16, 1 June 2011
Contents
Economic Efficiency
Pareto Efficiency
Vilfredo Pareto
Allocation so that no one can be made better off
[[File:paretoefficiency.gif[frame]]
Microeconomic Definition of Maximization of Utility via Minimization of Cost
failure to account for equity
"what if"...society can derive utility from equity...(MBequity>MCequity => Efficiency = Equity)
conflict of incentives, because someone can be made better off, they have an incentive to not support equity
cost effects of attempting (Effect on PPF, inhibit econ growth...$ could be used on capital)
counterarg...$ used for equity has a higher effect on economic growth, spending chain, human capital
Social Welfare Functions
Utilitarianism
Rowlslian