Yun, Kwan Koo: Efficient, Equitable and Pareto Improving Changes
World Conference Econometric Society, 2000, Seattle

Kwan Koo Yun, SUNY at Albany
Efficient, Equitable and Pareto Improving Changes
Session: C-8-2  Monday 14 August 2000  by Yun, Kwan Koo
We give two general procedures for determining whether efficient, equitable and Pareto-improving local changes are possible. When they are, the procedures compute for them. The first method specifies the share ratio of the aggregate benefit increase and then attempts to find an efficient change generating it. The second method maximizes a generalized Nash product of benefit increases. Equity considerations are reflected in the choice of share ratios in the first method and in the choice of exponents in the second. Any procedures generating efficient and Pareto-improving changes can be replicated by these procedures. The two approaches form an interesting duality. We give applications to piecemeal tariff reforms and to exchange processes including M70 and MDP processes.

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