Compensation Principle of Kaldor, Hicks and Scitovsky

In this article we will discuss about compensation principle of Kaldor, Hicks and Scitovsky. Kaldor, Hicks and Scitovsky have given their tests for judging an increasing in welfare. Like Pareto, they isolate the problem of production from that of distribution. They deal with policy change with ambiguous welfare effects saying that if the people benefiting from it can gainfully compensate [...]