Fundamental theorem of welfare economics

The fundamental theorem of welfare economics refers to either one, or both, of these theorems:

• First fundamental theorem of welfare economics: This states that any Walrasian equilibrium is a Pareto-efficient outcome. In other words, there is no change that can be made that makes nobody worse off and at least one person better off.
• Second fundamental theorem of welfare economics: This states that, with suitable headstarts, or initial transfers, any Pareto-efficient outcome can be realized as an equilibrium.