Utilitarianism and Equity

1. Utilitarian Social Welfare Function http://plato.stanford.edu/entries/utilitarianism-history/

2. First Theorem: Under certain conditions, competitive markets lead to an allocation where there is no rearrangement of resources (no possible change in production and consumption) such that someone can be made better off without, at the same time, making someone else worse off. http://plato.stanford.edu/entries/justice-distributive/

3. Second Theorem: If we don’t like the income distribution generated by a competitive market(Crusoe and Friday), we need not abandon the use of the competitive market mechanism. All we need to do is redistribute the initial wealth, and then leave the rest to the competitive market.

4. Two notions of utilitarianism are Pareto-efficiency. http://www.investopedia.com/terms/p/pareto-efficiency.asp

5. and the Kaldor-Hicks principle. http://en.wikipedia.org/wiki/Kaldor%E2%80%93Hicks_efficiency