The Equity-Efficiency Relationship

The Double Criterion versus Pareto-Efficiency

Abstract

The paper is devoted to the analysis of the equity-efficiency relationship from the standpoint of the proposed double criterion of efficiency as opposed to the criterion of Pareto-efficiency. The equity-efficiency relationship with an extremum, obtained in the paper exceeds the boundaries of the traditional approach to this problem. Empirical verification of the proposed model shows that it corresponds to the facts much better than the traditional equity-efficiency trade-off model.