Paretotehokkuutta

Paretotehokkuutta, or Pareto efficiency, is an economic concept that describes a state where no individual can be made better off without making at least one other individual worse off. It is named after Vilfredo Pareto, an Italian economist and sociologist. The core idea is that resources are allocated in such a way that it is impossible to improve one person's situation without harming another's.

In a Pareto efficient allocation, all potential gains from trade or reallocation have been realized. If a situation is not Pareto efficient, it means that there is a way to reallocate resources to benefit at least one person without harming anyone else. This is known as a Pareto improvement.

Pareto efficiency is a key concept in welfare economics. It provides a benchmark for evaluating the efficiency of different economic outcomes or policies. However, it is important to note that Pareto efficiency does not necessarily imply fairness or equity. A situation can be Pareto efficient while still involving significant inequality. For instance, one person could possess all the resources while everyone else has nothing, and this would still be Pareto efficient if no one could be made better off without taking resources from the wealthy individual.

The concept is widely used in analyzing market outcomes, public policy, and game theory. It helps economists understand how efficiently resources are being used within a system.