The Efficiency and the Kaldor-Hicks Effect: The Issue of Social Compensation

Martinho Martins Botelho

Abstract


This article aims to give an overview about the economic efficiency according to the criteria of Nicholas Kaldor and John Hicks, besides providing with some particularities the method developed by both economists, the social compensation. It reflects the idea of social recovery of losses caused by an efficient decision in the sense of wealth maximization. This is one of the concepts of efficiency in Economic Analysis of Law, to which is added the allocative efficiency and Pareto efficiency. It will be show the efficiency as a theoretical assumption in EAL, the Kaldor-Hicks efficiency and the social compensation.

Keywords


Social compensation, Economic efficiency, Kaldorhicks effect

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DOI: https://doi.org/10.26668/IndexLawJournals/2526-0057/2016.v2i1.1595

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