What is "Pareto improvement"?

Pareto criterion is an economic concept put forward by Italian economist Pareto, that is, in a given state of resource allocation, no change can make at least one person's situation better without making anyone's situation worse. And this "optimal state standard" is called "Pareto standard". The author of this paper uses this economic concept to explain some problems in property management, which will play a strong guiding role in adjusting business philosophy, improving work efficiency and realizing "win-win" between enterprises and owners.

First, the basic meaning of Pareto

1897, Italian economist Pareto put forward an optimal national standard, referred to as "Pareto standard", when studying resource allocation. The main contents include: in a given state of resource allocation, no change can make at least one person's situation better without making anyone's situation worse. Otherwise, it is not Pareto standard, but Pareto improvement.

Pareto improvement is a concept of economics, that is, there is no loser in the change of a system, but at least some people can win. Pareto improvement is based on people's vested interests, not what people are trying to achieve, because the latter is endless. If an improvement deprives some people of their vested interests, it is not Pareto improvement, no matter whether it can bring greater overall interests or help achieve lofty goals. Pareto improvement is to improve the fairness and efficiency of society through continuous improvement, so that the development of society and things can reach the "ideal kingdom". In short, beneficial things or institutional arrangements that all parties agree on must be Pareto improvement, and there is no reason why society should not allow things that are beneficial to everyone.

For example, the water in a stream flows all the year round, and outsiders come here to get some water from the stream to drink. From the perspective of normal water supply, it has no effect on nearby residents. Then, this kind of water consumption and drinking quantity of outsiders is Pareto improvement. Another example is a 30-seat bus, which is arranged in an orderly and one-time manner when it is fully loaded, that is, Pareto arrangement. Before full load, every additional passenger is a Pareto improvement. When the vehicle reaches the full load operation of 30 passengers, it reaches Pareto optimality.

Pareto standard and Pareto arrangement are resource allocation and institutional arrangement under ideal environment and conditions, Pareto optimality is the "ideal kingdom" of fairness and efficiency, and Pareto improvement is the way and method to reach the "ideal kingdom". Pareto improvement, Pareto arrangement, Pareto standard and Pareto optimality are one of the inexhaustible motive forces for human progress, things advancement and social development, and they exist and act in all fields of society.

Second, property management and Pareto

China's property management came into being in 1980s, which is a new industry with the development of market economy and the reform of housing system. Due to the short development history, there are some defects and problems in the theoretical research and practical operation of property management in China to varying degrees, and it is still in the basic stage of groping forward. In view of this, the property management industry urgently needs the breakthrough of basic theory and the strong support of macro-policies, and needs to introduce Pareto concept with rational allocation of resources, optimization of system design, continuous improvement of system arrangement and improvement of fairness and efficiency as its core connotation.

Pareto standard is neither a quantitative standard nor a logical system, but an idea and methodology. Using Pareto standard, Pareto arrangement and Pareto improvement to comprehensively examine the rapidly developing property management in China, study the resource allocation of property management, and analyze the commodity exchange behavior and institutional arrangement of property management services, which can make us detached from the current property management institutional arrangement and actual operation, and observe and analyze the property management service activities with a technical, comprehensive, calm, objective and rational eye. So as to constantly improve and optimize the system design of property management, continuously improve the efficiency and fairness of property management, make property management gradually approach the Pareto standard, and reach the "ideal kingdom" of property management-Pareto optimal property management.

Three. Enumeration and analysis of non-Pareto arrangements in property management

The concept of Pareto is introduced into property management, and the activities of property management are analyzed and defined by Pareto standard and connotation. In all aspects and contents of property management, there are non-Pareto arrangements of property management to varying degrees. Non-Pareto arrangement of property management refers to the defects and problems in the institutional arrangement of property management activities, which leads to the damage of one or more parties in property management transactions, the deterioration of resource allocation and the reduction of fairness and efficiency. For example, in the practice of property management, there are non-Pareto arrangements in the selection of property management service units, the agreement on service standards, service methods and service contents, the calculation and determination of property management fees, the allocation and payment methods of management fees, the use control and management supervision methods of management fees, the manifestations of pre-service and comprehensive service of property management after owners move in, the behavior of property management services, the supervision, assessment and management methods of service effect and efficiency.

Among them, the selection of property management service units shall be determined by the construction unit through public bidding or other means in accordance with the provisions of relevant national and local laws and regulations before the property is completed and delivered. On this basis, the two parties entered into a property management service contract, and the property management service provided the construction unit and the owner with prophase property services and comprehensive property management services after occupancy according to the contract. The implementation, management and supervision of property management services, the calculation and determination, allocation and payment, management and supervision of property management services, and the assessment and management of property management services are also agreed by the construction unit, property management unit and relevant units through consultation and contract negotiation, and agreed in advance by contract. Like the hiring of property management service units, it is also a kind of property management system arrangement, and the * * * nature of these two system arrangements is that the construction unit will make arrangements on behalf of (or instead of) the owner before the owner moves in, and it will be confirmed by law or other forms. In most cases, the construction unit is neither the consumer nor the undertaker of property management services, but the arranger of property management services.

In fact, this institutional arrangement of property management makes it almost impossible for owners to choose a property management company to provide services for themselves after buying a house, resulting in only one service provider or seller in a closed specific market. The consultation and selection of property management services, and the implementation, supervision and management of property management services are all negotiated, negotiated, purchased and arranged by the construction unit rather than consumers. Due to the different starting points and ideas, the construction units often have great differences with the owners' ideas and requirements when making corresponding property management arrangements, which in turn leads to various contradictions and problems. Although measures such as government supervision, owner's participation in management can be taken afterwards, or improvement and rearrangement can be made according to legal procedures, due to the limitation of administrative resources, owner's professional knowledge, ability and time, supervision and management are often a mere formality, and it is difficult to achieve ideal results. Generally speaking, the possibility of changing the status quo of property management tends to zero.

If the construction unit recognizes and accepts the unreasonable property management service price for some reason when hiring the property management service unit, it obviously harms the interests of the owners, but to change this property management arrangement, it must go through certain legal procedures, such as holding a general meeting of owners to vote. From the practical point of view, the possibility of realization is extremely small in most cases. Moreover, as the maker and supervisor of the rules of the game in the property management market, the possibility of administrative intervention is basically zero when the administrative law enforcement ability is limited, the property management operation is not beyond a certain range, or the contradiction is not intensified to a certain extent.

This kind of property management system arrangement that harms the interests of one or more parties is the non-Pareto arrangement of property management. Non-Pareto arrangement of property management, there are many identical or similar institutional arrangements in the operation of property management, for example, some relevant documents such as owners' convention and property management regulations were unilaterally determined by the property management unit in advance before the owner moved in, but the owner failed to perform the necessary procedures after moving in. Due to the lack of fairness, rationality and legitimacy, this kind of property management system arrangement is often not recognized and implemented by the owners. In order to establish a reasonable property management system arrangement, it is necessary to convene the owners' meeting again or renegotiate with the property management party.

It can be seen that the non-Pareto arrangement of property management, on the one hand, leads to the waste of social resources and the reduction of fairness and efficiency of property management, on the other hand, it is also one of the fundamental reasons for many contradictions and problems in property management. In the theoretical research, legal formulation, institutional arrangement and practical operation of property management in China, grasping and applying the Pareto concept of property management, rationally allocating property management resources, optimizing the design and arrangement of property management system, and constantly improving the fairness and efficiency of property management will make property management enter the track of benign development.

Excerpted from China Property Management.

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