Question

What is the compensation principle? What are the limitations of the rule? 

   What is the compensation principle? What are the limitations of the rule?
Intermediate Microeconomics
Intermediate Microeconomics
Robert W. Clower,… 1st Edition
Chapter 20, Problem 16 ↓

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According to this principle, a policy change can be considered an improvement if those who gain from the change could theoretically compensate those who lose out, and still have some benefit left over. The principle does not require that compensation actually be  Show more…

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