compensation principle

Definition

As a basis for welfare comparisons, the idea that if a policy change (such as a tariff reduction) could be Pareto improving if it were accompanied by appropriate lump-sum transfers from winners to losers, then it is viewed as beneficial even when those transfers do not occur.

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The compensation principle was a really good principle in my eyes and I was happy to be able to work with it.

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You should try to follow the compensation principle and make sure all your workers get what they are owed every year.

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The compensation principle was intelligently used to discuss how the policy changes affected each participant in the market in question.

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compensation package compensatory damages