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Analyzing a Proposed Change to a Coercive Allocation
Consider an allocation where a powerful individual forces a worker to produce 10 units of output, which is the maximum possible. The powerful individual takes 9 units, leaving the worker with 1 unit. This initial allocation is Pareto efficient. A reformer proposes a change: the worker will now produce 8 units and get to keep 2, with the powerful individual receiving the remaining 6. Explain precisely why the reformer's proposal is not a Pareto improvement over the initial allocation.
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