Pareto's Compensation Principle
Posted: 17 Oct 1999
Pareto is sometimes credited with an early formulation of the ill-fated Hicks or Kaldor principles of hypothetical compensation. The basis for this claim is Pareto's 1894 article "Il massimo di utilita dato dalla libera concorrenza." However in that paper Pareto argued to the contrary, that in the formulation of economic policy compensation should be a consideration only if it is carried out. Our purpose is to document this claim.
JEL Classification: N01
Suggested Citation: Suggested Citation