Compensation and Political Feasibility: Facilitating Welfare Improving Policies
Richard E. Just, Gordon C. Rausser, David Zilberman
October 1992 [90-GATT 19]
There is a broad consensus among economists, policymakers, and informed citizens that free-market economics do not preclude many inefficiencies in resource allocation. There are many circumstances where policy interventions have the potential to achieve a "Pareto improvement" in the sense of making some people better off without making others worse off. The challenge to any particular market-oriented society is to design those mechanisms, organizations and institutions that identify the limitations of free-markets and result in those reforms that seek Pareto-improved outcomes.
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