Short answers, pulled from the story.
Economic efficiency describes a state where any change to help one person would inevitably harm another. This concept was described by economist Vilfredo Pareto in 1935 within microeconomic theory.
Allocative efficiency became part of microeconomic theory when economist Vilfredo Pareto described the relevant state in 1935. A market achieves this status when the price of a product equals the marginal value consumers place on it and matches the marginal cost of production.
Government involvement is considered necessary at the macroeconomic level via fiscal policy and monetary policy following Keynesian economics. At the microeconomic level there is debate about how to achieve efficiency through laissez-faire measures or regulation to reduce market failures.
Germany follows Ordoliberalism as its guiding philosophy within the Freiburg School of economics. Other Anglosphere nations including the United States, United Kingdom, Canada, Australia and New Zealand utilize institutional economics to characterize expanded government roles.
A move toward greater market perfection in another sector may actually decrease overall efficiency if some unavoidable market distortion exists in one sector. This paradox challenges simple assumptions that deregulation leads automatically to better outcomes.