Top Market Strategy

3.2 Universal and Predictable

Pareto compiled his teaching notes into a book, entitled Course in Political Economy.2 This quantitative book built upon his college thesis by proposing a general equilibrium theory, namely, the distribution of inputs relative to outputs. According to this theory, equilibrium is reached when the top 20% of the inputs generate 80% of the outputs balanced by the bottom 80% of inputs generating 20% of the outputs. The 80/20 rule summarizes the equilibrium point of the Pareto distribution.